Chinese investment in Australia plunges to lowest level in at least 15 years

SYDNEY – A diplomatic fallout between Australia and China has taken a heavy toll on Chinese investment, which has plunged to the lowest level in at least 15 years.

A new report by KPMG and the University of Sydney found that Chinese companies invested just US$585 million (S$811 million) in Australia in 2021, down from a peak of US$16.2 billion in 2008.

The report shows the plunge in investment began in 2017, just as relations between the pair turned sour.

In the four years to 2017, China invested more than US$40 billion in Australia – making Australia one of the largest destinations for Chinese investment. But Chinese investment in Australia in the four years from 2018 amounted to just US$11 billion.

According to Chinese government data, China’s foreign investment had not dropped during the Covid-19 pandemic and increased in both 2020 and 2021.

The fallout in ties between Beijing and Canberra followed China’s anger at a range of measures, including Australia’s foreign interference laws, its ban on Chinese telecommunications giant Huawei from participating in its 5G roll-out, and its call for an inquiry into the origins of Covid-19.

Despite signs of a thaw since a recent change of government in Australia, the new Australian Prime Minister, Mr Anthony Albanese, has made it clear he will not make concessions to Beijing.

In comments that riled China, Mr Albanese on Tuesday (June 28) warned that China should learn lessons from Russian President Vladimir Putin’s “strategic failure” in invading Ukraine.

“Russia’s invasion of Ukraine can be seen as a strategic failure,” he told the Australian Financial Review. “If their objective was to enhance their power very quickly then that hasn’t occurred. The resistance of Ukraine has brought democratic nations closer together which have a shared commitment to rules-based, international order.”

Asked whether the global response to the Ukraine invasion had lessons for Beijing, which seeks “reunification” with Taiwan, Mr Albanese said the invasion “had shown attempts to impose change by force on a sovereign country meets resistance”.

The comments drew criticism from Beijing, which said on Tuesday that Taiwan was “not a sovereign country” and could therefore not be compared to Ukraine.

“Taiwan is by no means Ukraine,” Chinese Foreign Ministry spokesman Zhao Lijian told a regular press briefing in Beijing on Tuesday.

“They are not comparable at all… We hope relevant politicians can avoid making irresponsible remarks.”