Australia's status as a favoured destination for Chinese direct investment is being eroded by increasing competition from other countries such as the US and Canada, a new report warns.
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.