China Shifts Investment Away From Australia

China is ramping up its global investment outreach with a renewed emphasis on emerging economies in Southeast Asia and beyond, while Australia finds itself on the sidelines. In 2024, Chinese mergers and acquisitions in Australia rose 41% to US$862 million - but remain far from their previous highs, sitting 95% below the 2008 peak of US$16.2 billion. The preference for markets less entangled in US-China tensions seems to be steering Beijing’s capital elsewhere.

Chinese investors have historically seen Australia as a strategic player in global mining, but political hurdles and regulatory reviews have dampened enthusiasm in recent years. Though the sector still receives the bulk of attention from Chinese firms, it’s increasingly for Australian entities with overseas projects rather than purely domestic assets. Australia maintains a reputation for strong legal and compliance standards, yet investment activity remains muted.

Last year, mining attracted 86% of total Chinese investment in Australia, but most deals focused on foreign projects. For example, Hong-Kong’s Zhaojin Mining paid $733 million for a WA-based miner due to its stake in a gold project in West Africa, and China’s Ganfeng Lithium took a 40% stake in a Mali-based lithium site valued at $195 million. This shift suggests a deliberate move toward asset diversification abroad, possibly to navigate around regulatory scrutiny.

This recalibration reflects broader political and economic shifts. China’s outbound direct investment rose 10.5% in 2024 to reach US$144 billion, with much of it aligned with the Belt and Road Initiative. At the same time, renewed tensions between China and the US, especially under the latest Trump administration, are prompting Beijing to form tighter alignments with non-Western markets. Australia, once a primary investment destination, seems less central in that evolving framework.

Source: Australian Financial Review, WTO, KPMG