Chinese investment in Australia plummeted 61% in 2020, the lowest number in six years.
The drop in investment comes amid a growing diplomatic rift between the two countries.
The Australian National University’s Chinese Investment in Australia Database (CHIIA) recorded just over $780m (A$1bn ; £550m) in investment.
Only 20 Chinese investments were recorded in 2020, well below the 2016 peak of 111.
Last year’s decline came on top of a 47% drop from 2019, when Chinese investment totalled $1.57bn.
Dr Shiro Armstrong, director of the East Asian Bureau of Economic Research, where CHIIA is based, said the decline in Chinese investment in Australia outpaced falling global foreign investment last year.
“Foreign direct investment fell globally by 42% according to the United Nations (UN),” Dr Armstrong said in a media release. “UN data is measured differently, but the fall in Chinese investment to Australia was much larger.”
Chinese companies have invested across all sectors of Australia’s economy in recent years, but last year they only bought into the real estate ($357m), mining ($321m) and manufacturing ($119m) sectors.
The drop is at least partly due to Australia’s investment settings during the Covid-19 pandemic.
The government announced temporary measures in March that would subject every proposed investment to scrutiny by Australia’s Foreign Investment Review Board (FIRB).
Previously, a review only applied for “non-sensitive” transactions if the investment was worth $930m, or $213m for investors from countries without a free trade agreement with Australia.
The aim was to prevent a fire sale of distressed Australian assets to foreign owners, but it also delayed investments as the FIRB dealt with a backlog, blowing out the review period from 30 days to six months.
The Australian government also announced additional reforms to its foreign investment laws in July, which added a national security test and allowed the treasurer to cancel deals retrospectively.
In August, the Treasurer Josh Frydenberg stopped the $600m sale of Japanese beverage giant Kirin’s wholly-owned Australian subsidiary Lion Dairy and Drinks to China Mengniu Dairy.