Shock figures from the Australian National University said Chinese investment had plunged from Aus$4.8 billion (£2.7 million) to just Aus$2.5 billion (£1.4 billion) last year. It was the third consecutive year that Chinese investment in Australia dropped since peaking at Aus$15.8 billion in 2016.
The steep fall far outpaced a global decline in China’s overseas ventures of 9.8 percent last year, reflecting the bilateral political tensions.
It comes after China’s state media condemned raids on the homes of Chinese journalists working in Australia.
China News Service said on Saturday that the raids “grossly violated the legitimate rights and interests of Chinese media reporters stationed in Australia, and caused serious damage to the physical and mental health of journalists and their families.”
That followed similar comments by state-run Xinhua News Agency, which said late on Friday that the actions taken by Australian authorities were “utterly appalling” and damaged relations between the two countries.
At the same time, China’s state-backed tabloid Global Times claimed earlier this week that Australian authorities raided the homes of four Chinese journalists residing in the country in June.
Australia’s trade minister on Friday responded to the reports saying that security agencies had acted in accordance with the law, according to Reuters.
Relations between the two countries have become increasingly fraught over a host of issues ranging from Australian accusations of Chinese meddling in domestic affairs to trade disputes and calls by Canberra for an international enquiry into the origins of the novel coronavirus.
Canberra announced tougher measures to block or overturn new foreign investments deemed to compromise national security in June.
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But this move was widely viewed as an effort to limit growing Chinese influence.
The country has also barred Chinese telecoms giant Huawei from being a major player in its 5G rollout owing to concerns about its relationship with state security agencies, a decision that riled Beijing.
China, which is Australia’s biggest trade partner, has since imposed tariffs on Australian products from beef to barley and has discouraged Chinese students and tourists from heading down under.
Professor Peter Drysdale, who led the University economic research, said: “In the last few years, clearly Chinese investors have found the investment environment in Australia less certain and have been more cautious about undertaking investment in Australia.”
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The academic said structural changes were also partly to blame, with Chinese investors retreating from mining and resources as the commodity boom weakened.
Investment in Australian real estate and agriculture also fell in 2019 but “modest gains” were made in the construction, education and finance sectors.
Professor Drysdale said it was important for Australia to consider how to reverse the “continuing downward trend” due to the key role of foreign investment in supporting economic growth and trade.
He added: “Whether that can be changed quickly or not is another question altogether because it very much depends on how purposeful approach there is to mending the relationship between the two countries.”