Chinese Investments Drop By 61% in Australia

After the events of COVID-19 affected China’s economy at the start of 2020, the economic giant decided to keep things local for the year.

That fact, along with a growing diplomatic rift between them and Australia, showed an investment drop of 61% between the two countries. It’s the lowest level of monetary transfer since 2015.

The Australian Database CHIIA found that about $1 billion in Australian dollars was received, equivalent to about $780 million in US funds.

Only 20 investments were recorded for the year, which is significantly lower than the 111 that occurred in 2016. This drop is on top of another 47% reduction that happened from 2019.

Why Did Australia Lose So Much Money?

The issue of foreign direct investment (FDI) goes beyond whatever rifts China and Australia have with each other. Data from the United Nations shows that total FDI levels dropped by 42% globally in 2020.

Although Australia’s outcomes were above average because of their relationship with China, the issue is more profound because their FDI receipts are in only three sections: mining, real estate, and manufacturing.

Australia is also partially to blame for this outcome. The government announced in March that every proposed investment would receive additional scrutiny from a review board. In the past, only non-sensitive transactions applied for assets worth $930 million or more.

That switch stopped a $600 million sale of Lion Dairy, a wholly-owned subsidiary of a Japanese company, to the China Mengniu Dairy.

If that one transaction were allowed, the figures would have been similar despite the fewer total numbers.

China continues to treat the countries that are calling for COVID-19 investigations with restrictions or tariffs. Some products have totaled more than 200%, causing a lot of alarm since about 40% of exports head there from Australia.