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Chinese Investment in Australia Hits Two-Decade Low Amid Economic Slowdown

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Chinese Investment,Australia,Economic Slowdown

Chinese investment in Australia has reached its lowest level in almost two decades, excluding the pandemic years, and is expected to continue declining as the Chinese economy slows down. According to a report by KPMG and the University of Sydney, Chinese investment in Australia fell by 37% to $1.36 billion in 2021, marking the lowest level since 2006. The decline in Chinese investment is attributed to rising tensions between the two countries.

​Chinese investment in Australia has plunged to its lowest level in almost two decades, excluding the pandemic years, and is expected to continue to contract as the world’s second-largest economy slows.

The decline of Chinese investment in Australia is partly to blame on rising political tensions between the two countries that escalated under the Morrison government, particularly after the then prime minister Scott Morrison called for a global inquiry into how the COVID-19 outbreak started. This declining trend occurred as successive Australian federal governments tightened restrictions on foreign investment in a number of sensitive sectors, from infrastructure to critical minerals. Critical minerals, among them nickel, lithium and cobalt, are important to the green energy transition, advanced manufacturing and defence technology.

The KPMG and University of Sydney report said a further reason Chinese investment in Australia had declined was that Chinese money was increasingly being redirected towards Belt and Road Initiative projects. Last year, Chinese investment in those projects rose 28 per cent to $US32 billion. An example of this threat was the billions of dollars of Chinese investment that flowed into Indonesia, helping it develop into a global nickel hub. The investment and technology from Chinese companies enabled Indonesia to process raw ore into higher-grade nickel, which Australia had done.

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