China has invested more than $40bn into Australian projects between 2014 and 2017, and over half of this amount benefited the mining sector. The rest went to healthcare, transport and social care.
A team from the East Asian Bureau of Economic Research investigated 262 different Chinese acquisition procedures to determine how the country went about investing in Australia.
The bureau’s Chinese Investment in Australia (CHIIA) program showed that Chinese investment has increased largely over the last few years, with 2016 seeing $14.9bn in transactions alone.
While state-owned investment vehicles on the Chinese side were only responsible for a fifth of all investments by volume, their total value was closer to half of the overall figure. This suggests that China wants to ensure that mutually beneficial Australian projects moved forward as planned.
Around 70% of these investors actually live and have a base in Australia, while the remaining number are based in China or islands with a beneficial tax structure. These include the Cayman Islands, Bermuda and the British Virgin Islands.
The bureau’s report also found that 88% of these investments were worth $100m or more, showing that very few of the listed figures made available were for small projects and clearly came with strong financial backing.
Peter Drysdale, Lead Researcher and Chief Economist at the Australian National University’s East Asian Bureau of Economic Research, said that he hoped to be able to clarify the nature of Chinese investment in Australia, given that many questions have centered around this subject. Because China has given so much money to Australia, now is the best time to create a database that gives clear information on the structure and scale of these investments.
While Drysdale maintained that his team is offering the most accurate data possible regarding this situation, the Australian government is yet to confirm if it will consider adapting its policy to introduce methods of analyzing foreign investments coming into the country.
Calling on other institutes to follow suit, Drysdale said that it would be beneficial to track financial transactions coming into and going out of Australia more effectively, as this would help paint a clearer picture of the markets at present and how they might change in the future.
Noting that enabling transparent supply chains for financial investments from international sources is key to determining where the money is going and how the Australian economy could better adjust to it, the bureau confirmed that it is now working on applying the same methodology to Chinese funding that came in this year.
It is using same tools to look at the Japanese investments currently pouring into Australia to see if any patterns emerge. The team working on the CHIIA project will determine whether the investment procedures are the same or if each foreign investment vehicle uses a different approach to secure a return.
The methodology in question cross-referenced publicly available data with official statistics and figures from government bodies. Researchers at the Australian National University compiled the data.