China has turned the cash tap off for Australia and slashed its big money buy-up of Aussie businesses and land – but vast tracts of the country are still Chinese-owned.
The communist superpower last year spent 28 times LESS in Australia than at its peak, investing just $815million in 2021, compared to the $22.5billion-plus it splurged in 2008.
Since the global financial crisis, China has pumped a staggering $153billion into Australia, splashing more cash here than anywhere else in the world except the USA.
The Chinese have snapped up a key port, mines, agricultural land, dairy processors, valuable real estate, state-sponsored schools, plus water and energy companies.
Almost every aspect of Australian life now has Chinese influence – even down to paying with Afterpay, which is part-owned by China’s Tencent.
But deteriorating relations between China and Australia – which this week saw Defence Minister Peter Dutton warning of a possible war – has cut off the cash flow.
A map highlighting some of China’s purchases and deals on Australian soil
Latest figures in a new study reveal Chinese investment in Australia in 2021 was down by almost 70 per cent on 2020, which was already the lowest since 2007.
Tougher scrutiny for overseas takeovers and tighter screening have been key factors for China’s sliding interest in Australia, said international accountants KPMG in the new report.
Just two major Chinese acquisitions made it past Australian business regulators in the past year, after earlier Beijing bids for Lion Drinks and Alita Resources – worth a combined $670million – were blocked.
Both of the latest buys were in the mining sector, with lithium miners AVZ Minerals bought by Suzhou CATH Energy-Technologies for $318million, and Balmoral Iron Pty Ltd bought by CITIC for $187million.
Overall, just 11 Chinese transactions got the green light in the last year, compared to 20 the year before.
‘There are a number of administrative obstacles in more stringent regulations for Chinese companies investing in Australia now,’ report co-author Dr Hans Hendrischke told Daily Mail Australia.
‘And the political issues mean people would consider the long term commitment very carefully now before they decide to invest.’
Despite Covid, China still increased its overall overseas spending in 2021, with Beijing investments in Europe growing by a quarter, and a shift in strategy to see more cash for smaller, more local projects than the bigger acquisitions of the past.
But China’s 15-year spending spree here means the superpower still owns huge chunks of Australia, despite the escalating tensions between the two nations.
The Northern Territory government decided to lease the Port of Darwin (pictured) – now known as Darwin Port – to Chinese-owned company Landbridge for 99 years
China’s President Xi Jinping is pictured in December 2019 during a trip to Micronesia
The tense stand-off has called into question the 2015 decision to grant a 99-year lease on the Port of Darwin to Chinese-owned Landbridge, which has links to the People’s Liberation Army of China.
The controversial $500million deal is said to be legally locked in and cannot be undone, which raised the ire of then-US President Barack Obama.
But Prime Minister Scott Morrison insisted last month the government could not have blocked the sale of the lease.
‘There was no authority for the federal government to reject, approve anything in relation to the leasing of that asset,’ he told Parliament.
The deal at the time was outside the remit of the Foreign Investment Review Board, which has since had its powers increased to become more of a watchdog body.
Northern Territory Labor MP Luke Gosling said the lease is a concern because all Chinese companies – even those privately owned – are ‘still accountable to Beijing’.
He said the deal was less about business and more about Chinese strategic interests – and the superpower’s notorious Belt and Road Initiative.
The global development plan is a key policy of President Xi Jinping and China aims to build and own infrastructure in as many countries throughout the world as possible to increase those nations’ dependence on China.
The controversial $500million Darwin Port deal was called into question at the time by then US President Barack Obama (pictured, Port of Darwin)
Smaller Third World countries are often tempted to sell their land, and their sovereignty, in return for big money deals offered by Beijing.
‘You won’t hear the government say this openly for obvious reasons – it oversaw the sale – but the 2015 lease of Darwin Port was part of the Belt and Road Initiative,’ Mr Gosling said.
Chinese companies are also the largest holders of Australian water, setting inflated prices that local farmers struggle to afford.
A report on foreign ownership on water entitlement found Chinese investors surged ahead of the US to own 1.9 per cent of our nation’s water in 2020.
Around 10.5 per cent – or almost six Sydney Harbours of the nation’s water – is now foreign owned, according to the report.
Chinese marines attend a military drill on the way to Port Darwin to attend Exercise Kakadu 2018 on August 30, 2018
China now owns 756 gigalitres of water after a three per cent boost of its share in 2018-19, putting it ahead of companies owned in the US (713GL) and the UK (394GL).
Increasing control of water assets came at a time that China was also boosting its ownership of agricultural land.
Mawallok Estate in Stockyard Hill, in western Victoria, changed hands for an undisclosed price after being marketed with a huge $25million asking figure.
Title documents also show the largest exporter of Australian wool, Chinese business tycoon Qingnan Wen, bought the heritage-listed sheep station.
Two months later in August 2020, a 5,071-hectare farm property located near Ballan, about 60km west of Melbourne, was snapped up for $60million by China’s Guangxi Investment Co by their subsidiary Harvest Agriculture.
The energy sector is another area where Chinese investors have looked to buy big.
Despite its deceptive name, Energy Australia is owned by China’s Light and Power Co, while Alinta Energy is a subsidiary of Chow Tai Fook Enterprises.
In 1993, China’s biggest airline, state-owned China Southern Airlines, paid the Western Australian government $1 to lease Merredin Aerodrome (pictured) for 100 years
Mawallok Estate (pictured) in Stockyard Hill, in western Victoria, changed hands for an undisclosed price after being marketed with a huge $25million asking figure
How does the water market work?
Government appointed bodies decide how much water from rivers can be given out each year. Once it is allocated, users can trade their water.
There are two main types of water trade: temporary and permanent. A temporary transfer is a transfer of water specifically for the irrigation season.
If one farmer does not have enough water for his crops, he can buy water from another. A permanent transfer is the transfer of the water entitlement.
The purchaser buys rights to a yearly allocation of water from a river and receives the allocation until they sell.
The Australian water market is not national but split into different sections within each state. The largest market is the Murray-Darling Basin in the south east.
The largest water market in Australia is the Murray-Darling Basin (pictured) in the south-east
Coalmines in the Hunter region (pictured) have been snapped up by a state-owned Chinese firm, Yancoal
Increasingly China’s focus has been on snapping up Australian mining companies to feed its demand for mineral resources, especially lithium for technology products, and guarantee supply lines.
In 2020, Chinese companies made four major acquisitions, snapping up gold, copper, iron ore and coal mines in Western Australia and NSW for a combined total of close to $1billion.
Those takeovers followed Chinese mining group Yancoal purchasing BHP coal assets in NSW in 2017, including the Hunter Valley’s Mt Thorley Warkworth site.
Prior to the strengthening of the FIRB’s oversight powers, the $1.5billion sale of Tasmanian dairy processor Bellamy’s to Mengniu Dairy Company was approved in 2019.
But a similar bid for Lion Drink and Dairy was rejected by the more powerful FIRB the following year.
Most of the land owned by foreigners in Australia is in Western Australia and the Northern Territory and is used for cattle farming (stock image)
In reaction to the rejection, Chinese property developer Poly Global pulled the pin on a $300million bid to buy Bingara Gorge residential development in southwestern Sydney from Lendlease, after a reported ‘last-minute directive from Beijing’.
But in 2020, China-based Peakstone bought the 45 Clarence Street tower block in Sydney’s CBD for $530million after they managed to get the deal greenlit by the FIRB.
Under changes to ownership laws in Australia, all foreign investments must now be approved by the review board, regardless of their value.
The government has also introduced stricter regulations for foreign firms investing in sensitive industries including telecommunications, the energy sector and military supply lines.
‘China is now focusing on Australian commercial real estate and mining,’ added Dr Hendrishke.
‘But there is little sign of them disinvesting – they have sold Cubbie Station Cotton, but most other investments have remained in Chinese hands.
‘These are seen as long-term investments – and they’re holding on to them.’
The $1.5billion sale of Tasmanian dairy processor Bellamy’s to Mengniu Dairy Company was approved by the Foreign Investment Review Board in 2019
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