Chinese Investors Grow Wary of Australia as Tensions Rise

On Tuesday, June 12, 2018- Reports concluded that Chinese investors were turning cautious on Australia, the No. 2 economy’s state-owned enterprises pulled back on deals for the first time in three years.

The report said, ‘Total investment by Chinese buyers Down Under dropped 11 percent to $10.3 billion in 2017 from a year earlier. While that’s part of a global trend after China tightened foreign investment rules and clamped down on capital outflows, the decline also reflects mounting political tensions’.

Co-author and professor of Chinese business & management at the University of Sydney, Hans Hendrischke said, “Sentiment has currently shifted, with a higher level of apprehension by Chinese investors towards investing in Australia”. He also added, “Seventy percent of respondents stated that the political debate had made Chinese companies more cautious about investing in Australia.”.

At a commercial level, the stakes have increased. Australia is the most China-dependent developed economy with about 36 % of total shipments going to the mainland.

Other Key Findings:

  • Just 35% of surveyed, Chinese companies said that they felt welcome to invest in Australia, which decreased from 52% in 2014, only due to political tensions.
  • Moreover, Chinese investors find Australia a safe environment than any other countries due to its rule of law, stable market institutions, and comprehensive policies.
  • The Chinese government’s regulatory changes have also had an impact on the new investment in Australia, reported by around 77% of respondents
  • Tighter currency controls have also made it more difficult for Chinese companies to source finance from China, said 65% of participants

Hendrischke said, “There is a growing familiarity and confidence in the Australian market”. He also added, “While most Chinese investors retained a level of optimism about their Australian investments, some investors, especially SOEs, are apprehensive due to diplomatic tensions.”

by Sawan Kumar on June 12, 2018

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