China is investing less in Australia than ever before as it directs its economic might toward nations that have joined the Belt and Road Initiative.
According to a new analysis released today by the University of Sydney and consulting giant KPMG, state-owned and private Chinese businesses’ investments in Australian businesses decreased by 36% to $1.3 billion in 2023 from $2.1 billion the year before.
Between 2022 and 2023, Chinese mining investment dropped significantly, from $1.8 billion to US$34 million. According to the research, Chinese investors are cautious about pouring money into the industry, particularly in crucial minerals.
China, the second-biggest economy in the world, is investing more than 20% of its global total in nations that are part of the Belt and Road Initiative (BRI) than it has ever done before.
The Belt and Road Initiative (BRI) was introduced by Chinese President Xi Jinping in 2013 and has since invested hundreds of billions of dollars to finance the building of telecoms projects, ports, bridges, power plants, and highways throughout Asia, Latin America, Africa, and portions of Europe. However, it has also been met with skepticism, particularly in Western countries where governments are leery of Beijing’s ambitions on a global scale.
Chinese investment in Australia fell to its lowest level since 2006, according to Helen Zhi Dent, partner, Chinese business practice, KPMG Australia, and co-author of the report.
“This reflects the shift in priorities for Chinese ODI, which is increasingly flowing towards Belt and Road Initiative countries as well as towards mining and processing ventures in alternative markets, such as South East Asia,” she said. “However, the improving cross-border trade environment as demonstrated by the recent removal of wine tariffs could help to kickstart increased Chinese investor interest in Australian businesses. “This is particularly true in industries where Australian and Chinese businesses have a long history of mutual co-operation, such as resources, food and agribusiness, and renewables.”
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