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Chinese Investment In Australia Drops 50 Percent In Just One Year

Australian mining, manufacturing and real estate sectors could be the first to suffer after half of Chinese investment in Australia ceased in the last 12 months.

Between 2017 and 2018, investment fell from $9.6 billion to just $4.8 billion, marking the lowest level of investment in the last five years.

New data released by Chinese Investment in Australia (CHIIA) at the Australian National University shows $9 billion of Chinese cash has dropped out of Australia.

Researchers at CHIIA compared figures from sources including the Foreign Investment Review Boards and the Australia Bureau of Statistics to outline who is investing money in Australia and where they spent it.

The most recent figures, released on Tuesday, show 54 percent of Chinese investment in 2018 was in agriculture, followed by 23 percent in real estate. Mining attracted 10 percent of Chinese investment.

Chinese investment in Australia is gradually declining. Photo: Getty Images.

But it remains unclear how this change will impact on local Aussie sectors.

CHIIA's lead researcher Susan Travis told 10 daily the drop in investment shouldn't spark worry, but conceded long-term outcomes for everyday Australians can't be determined at this stage.

"It's something we should watch, but it's not something that in itself should cause alarm," Travis said.

"We don't have the answers just yet. This is the first step in more specific micro-economic answers."

READ MORE: How The World's Weakening Economy Affects Australia

Travis said withdrawal of investment from China in Australia is part of a global trend of reduction in foreign investment from the Asian superpower, so Australian businesses-owners and consumers shouldn't panic.

"The rise and fall recorded by CHIIA is in line with global Chinese outward investment trends,” she said.

CHIIA Data
Chinese investment has dropped since 2014. Photo: CHIIA

New research by the ANU Asian Bureau of Economic Research, also released on Tuesday, found Australia's economic and trade ties to China have actually grown in the last five years, despite the gradual drop in investment.

This is partly due to China and Australia sharing key economic interests, and the research details the need for Australia to maintain this closeness amid heightening trade tensions between Washington and Beijing.

READ MORE: What A Trade War Between China and The US Means For Australia

“The China-Australia economic relationship faces a range of challenges including uncertainties in the global economy," report co-author Professor Peter Drysdale said.

“Australia and China must work closely together in multilateral organisations to defend and strengthen the international system."

Chinese Investment In Australia
The real estate sector could be one area to suffer. Photo: Getty Images.

The trade relationship between Australia and China has grown five times more rapidly than the global average, according to the research. This was partly driven by Australian exports to China.

Contact Siobhan at skenna@networkten.com.au