Canada and US vie for Chinese investment
China's demand for iron ore and coal meant Australia retained its top ranking as the largest cumulative recipient of Chinese outbound investment since 2006.
However a joint report by KPMG and the University of Sydney found China was increasingly looking elsewhere to invest, despite the much-vaunted launch of the Asian Century white paper by the Gillard government last year.
"The USA and Canada in particular are catching up with Australia," said Professor Hans Hendrischke of the University of Sydney China Studies Centre.
"While Australia's accumulated Chinese direct investment is still ahead of its main international competitors, there is no denying that the rest of the world is hot on our heels and aggressively competing for Chinese capital."
By the end of last year, total accumulated investment reached $US51 billion in Australia, followed by $US50.7 billion in the US and $US36.7 billion in Canada. Other recipients were Brazil and Russia.
According to KPMG, Chinese direct investment into Australia grew 21 per cent in the past year to $US11.4 billion, up from $US9.4 billion.
The head of KPMG's China practice in Australia, Doug Ferguson, said while mining and resources still dominated Chinese investment in Australia, there were signs of greater diversification toward natural gas, agriculture and property.
Mr Ferguson said a notable development was the increased proportion of investments by privately owned Chinese companies last year.
But the numbers show the shift was gradual. Private Chinese investors completed 26 per cent of all deals by number and 13 per cent by deal value.
State-owned enterprises have historically accounted for about 94 per cent of deals by value.
"We are starting to see the next wave of Chinese investment in Australia being made by privately owned companies and this trend will continue under the new investment visa program which opens the door for high-net-wealth Chinese investors," Mr Ferguson said.
Frequently Asked Questions about this Article…
The joint KPMG and University of Sydney report found that while Australia remains a leading recipient of Chinese outbound investment, competition from countries such as the US and Canada is increasing. The report also noted growth in Chinese investment into Australia and signs of sector diversification beyond mining and resources.
Yes — by the end of last year Australia still held the largest accumulated Chinese outbound investment at US$51 billion, but the US (US$50.7 billion) and Canada (US$36.7 billion) are closing the gap and increasingly competing for Chinese capital.
According to KPMG, Chinese direct investment into Australia grew 21% in the past year, rising to US$11.4 billion from US$9.4 billion the previous year.
Mining and resources still dominate Chinese investment in Australia, driven by demand for iron ore and coal, but the report highlights growing diversification into natural gas, agriculture and property.
Yes — the report notes an increased proportion of investments by privately owned Chinese companies. Private investors completed 26% of all deals by number and 13% by deal value, whereas state-owned enterprises have historically accounted for about 94% of deal value.
The report suggests the new investment visa program could encourage more high-net-wealth Chinese investors and privately owned companies to invest in Australia, supporting the trend toward a broader investor base beyond state-owned enterprises.
Increased competition for Chinese capital means capital flows into Australia could face stronger global competition, but it may also spur more diversified inbound investment across sectors such as gas, agriculture and property — potentially creating new opportunities for everyday investors to watch.
Professor Hans Hendrischke of the University of Sydney said the USA and Canada are catching up and aggressively competing for Chinese capital, and Doug Ferguson, head of KPMG's China practice in Australia, highlighted the dominance of mining but noted signs of diversification and growing private-company investment.
Call 1300 880 160
Start a chat
Schedule a call
