The below data on China’s foreign direct investment (FDI) into Australia is based on the Australian financial year (FY) from July to June. The below data on China’s global FDI is based on calendar years. The data on China’s FDI into Australia is drawn from Foreign Investment Review Board (FIRB) annual reports and data on China’s global FDI is from the Organisation for Economic Co-operation and Development (OECD).
FIRB approvals for Chinese companies investing in Australia rise significantly each year between FY12-13 and FY15-16. Approvals then collapse dramatically between FY15-16 and FY16-17, which coincided with tightening FIRB rules and the appointment of the former head of Australia’s foreign and domestic intelligence services, David Irvine, as FIRB Chair. This steep fall was then followed by a steady reduction each year to FY19-20, which is the last year of available FIRB data. The numbers of FIRB approvals involving investors from other countries do not experience such a dramatic post-FY15-16 drop. Unsurprisingly, the tumbling number of FIRB approvals produces a dramatic decline in the value of Chinese FDI into Australia. After surging to approximately A$47 billion in FY15-16 as the number of FIRB approvals rise, it slumps year-on-year to approximately A$13 billion in FY19-20 as the number of FIRB approvals likewise collapses.
This dramatic downward trend in China’s FDI into Australia is probably partly a function of global trends in China’s FDI. After reaching a peak of US$216 billion in 2016, China’s FDI then fell suddenly in 2017 and had nearly halved to US$110 billion in 2020. But the dramatic decline in China’s FDI into Australia was probably not simply a function of broader macro trends in the changing pattern of China’s FDI globally. Whereas China’s overall FDI in 2020 was 51% of its 2016 peak, China’s FDI into Australia in FY19-20 was approximately just 27% of its FY15-16 peak. This mismatch indicates that the fall in China’s FDI into Australia in recent years was likely a product of factors beyond the fall in China’s FDI globally.
China’s annual FDI into Australia by value (A$ million) and China’s annual global FDI by value (US$ million), 2005 to 2020 (China-Australia data is FY data)