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Chinese investment in Australia drops to a 6-year low

China imposed dumping duties on Australian wine and barley last year. (AP photo)

Sydney: Chinese investment in Australia fell 61% last year to the lowest level recorded by the Australian National University in six years, as the diplomatic row worsened.

The annual tracking study from the university’s East Asia Bureau of Economic Research recorded Chinese investment of 1 billion Australian dollars (783 million US dollars), consisting of real estate deals (45%), mining (40%) and manufacturing (15%).

The office director, Shiro Armstrong, said the drop was greater than the 42% decrease in foreign direct investment globally that was measured by the United Nations amid the Covid-19 pandemic.

“It reflects the effects of Covid but it also reflects more scrutiny of foreign investment by the Australian government, especially from China,” he said.

Australia announced amending its foreign investment laws last year to give the government a veto or force the sale of a company if doing so poses a national security risk.

Treasurer Josh Frydenberg said in June that the national security test would apply to telecoms, energy, utility and data companies.

Chinese company Mengniu abandoned a deal to buy Australian dairy company Lion Dairy and Drinks from Japan’s Kirin in August, after the Australian government indicated it would block the sale.

The Chinese embassy said in November that 10 Chinese investments were banned in Australia for national security reasons, out of a list of 14 complaints Beijing has about Australian government policy.

Since then, China has imposed dumping duties on Australian wine and barley, and has restricted the dumping of Australian coal in Chinese ports.

ANU study showed that Chinese investment in Australia peaked at A $ 16.5 billion in 2016, covering agriculture, transportation, energy facilities, healthcare, mining and property.

By 2020, 86% of Chinese investment in Australia came from Australian subsidiaries of Chinese companies.

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