Chinese wary of investment in Australia

[Ulquiorra]

POLITICAL tensions and red tape are leaving Chinese investors cold, with barely one-third of Chinese companies saying they feel welcome investing in Australia.

After contentious foreign interference laws cleared Federal Parliament last week, a report shows the effect of political distrust on investor confidence.

The Demystifying Chinese Investment in Australia report by KPMG and the University of Sydney examined last year’s investment trends.

One of its key findings was that allegations about Chinese influence in Australian politics have made Chinese investors feel unwelcome and wary of potential impacts on approvals.

More than two-thirds of Chinese company executives surveyed said recent political debate in Australia had made them feel more cautious about investing.

A similar number said they believed the Federal Government had become less supportive of Chinese investment.

Only 35 per cent of executives said they felt welcome investing in Australia — down from 52 per cent in 2014. The debate about foreign influence — with an at-times unspoken focus on China — has since crystallised into sweeping legislation.

The Senate passed bills on Thursday which will strengthen espionage offences and force people acting for foreign governments or companies to declare their activities. Some offences will be punishable by up to 20 years in prison.

Attorney-General Christian Porter said the laws were a “critical tool” which agencies could use against those who would undermine the nation’s security and democracy.

According to the report, Chinese investment in Australia was down from $15.4 billion in 2016 to $13.3 billion last year, but investment in WA rose slightly from $1.38 billion to $1.49 billion.

The State benefited from major investments in Talison Lithium ($320 million) and Hanking Gold Mining ($330 million).

Investment in the country’s biggest market for China, NSW, fell from $8.06 billion to $5.6 billion.

A report released by Juwai, China’s biggest international property website, pointed to foreign buyer tax increases as another impediment to Chinese investment in Australia.

WA’s foreign buyers’ surcharge will rise from 4 per cent to 7 per cent from January 1, bringing the State into line with NSW, Victoria, South Australia and Queensland.

“Foreign buyers are responsible for the construction of four additional homes in Australia for every single residence that they purchase,” Juwai chief executive Carrie Law said.

“Even so, Australian States and Territories have not been able to resist filling their coffers with revenue from foreign buyer stamp duties. Foreign buyers do not vote, and are an easy target for confiscatory policies.”