SYDNEY, May 7 — New Chinese investment in Australia fell by almost 50 per cent in the year to the end of June 2019 as Beijing tightened controls on money flowing overseas, an Australian report showed on today.
The fall to A$13.1 billion (US$8.4 billion) was due to “China’s internal domestic policy settings including increased scrutiny of outbound investment and stricter capital controls,” Foreign Investment Review Board chairman David Irvine said.
Irvine, a former Australian intelligence chief, said the trend of falling investment by China, which is Australia’s largest trading partner, could be seen globally.
However, in the 2018/19 year there were tensions over allegations of Chinese interference in domestic affairs and an effective ban on Huawei from Australia’s 5G network.
Australia had tightened rules to allow it to veto foreign investments in critical infrastructure on national interest grounds, and to limit foreign purchases of residential property.
Irvine said he visited Beijing in September to hold briefings on the rules for potential investors, while the Australian government has said its foreign investment regime is non-discriminatory.
The FIRB said in its annual report it would work closely with the Department of Industry to screen foreign investment in rare earths, a new category of critical minerals projects.
While the number of Chinese mainland investment approvals fell by 1,915 to 4,901, with the value down 45 per cent to AU$13.1 billion from AU$23.7 billion to its lowest level since 2016, Hong Kong investors piled into property in Australia.
Approvals for real estate investments from Hong Kong hit A$9.3 billion in 2018-19, up from A$2.8 billion, the FIRB report, which was presented in parliament, showed.
The United States remained the largest source of approved investment in Australia, while China fell from second to fifth, ranking behind Canada, Singapore and Japan in 2018-2019.
US investment approvals rose to A$58.2 billion from A$36.5 billion in the period, mainly due to Walt Disney Corporation’s acquisition of the Twentieth Century Fox businesses.
Overall, foreign investment applications increased by A$67.9 billion to A$231 billion, with only one application rejected.
Hong Kong’s CKI Group’s A$13 billion bid for gas pipeline company APA Group was rejected in November 2018 by Treasurer Josh Frydenberg on national interest grounds.
The report said the European Union, Britain and New Zealand have strengthened foreign investment rules on national interest grounds in the past 18 months.
The Australian government said in March that the FIRB would assess all foreign investment proposals as a temporary measure during the coronavirus pandemic. — Reuters