FAST FOCUS | Chinese investment in Australia

Fast Focus by the Australia-China Relations Institute at the University of Technology Sydney (UTS:ACRI) provides concise, informed commentary by UTS:ACRI experts and invited specialists on key developments in Australia-China relations.

On May 6 2026, the Australian Bureau of Statistics (ABS) released new data on foreign investment in Australia, covering 2025.

These show that the stock of Chinese direct investment in Australia is $36 billion – the same level it was in 2015, and one-quarter less than in 2019. Since 2019, the People’s Republic of China (PRC)’s share of all foreign direct investment (FDI) in Australia has also fallen from 4.6 percent to 2.8 percent.

IN FOCUS: If Australia can still get investment from countries other than the PRC, do these numbers matter?

Professor James Laurenceson 
UTS:ACRI Director

Trade and investment are related. Australia’s biggest customers are often those most willing to put money into supporting local production. Their investments also act as a natural price hedge, particularly in the resources sector.

With a high-cost business environment, Australia has historically been especially welcoming of investment from those companies with the best technology – a source of competitive advantage. It is no surprise then that Japan buys 10 percent of Australia’s exports and provides 13 percent of foreign direct investment. Yet the PRC buys 30 percent of Australia’s exports and provides less than three percent of direct investment. That’s also despite more and more of its companies being technology leaders.

A recent UTS:ACRI report found that the business community wasn't suggesting that Australia should approve every Chinese investment proposal and turn a blind eye to potential security risks. Rather, there was a sense that the overall imbalance has become so extreme that Australia is undermining its own long-term economic security, the foundation of its national security.

Peter Osborne
UTS:ACRI Advisory Board Member; Former Managing Director Asia, Blackmores Limited

Australia’s trading and investment relationship with the PRC has always seen a much higher focus and weighting on trade than investment.  

As our largest trading partner, our expectation is that investment levels should match the scale of the trade relationship.  I think that’s always been a far too simplistic view.
 
The fall in the stock of Chinese investment in Australia is not surprising given how the world has changed, trade and investment flows have been disrupted by conflicts in Ukraine and the Middle East, combined with the endless, rapid change and evolution of the PRC’s economy and the country’s geopolitical focus. While investment from other countries should of course be welcomed and supported, it’s in Australia’s best long-term interest that the PRC always remains a major target for inwards FDI attraction and retention given the strong foundation investment plays in sustaining long-term bilaterial economic relationships between countries. 

Dr Garry Willinge
UTS:ACRI Advisory Board Member; Non-Executive Chairman, Gowin New Energy Group; Chairman, Infagen (Hong Kong) Limited

The latest ABS data showing Chinese direct investment stock in Australia unchanged at $36 billion since 2015 and well below 2019 levels matters, even with diversification from other countries.

Economically, this represents a material opportunity cost. Amid the PRC’s record capital outflows in 2025, Australia’s sharply reduced share of Chinese FDI (from 4.6 percent to 2.8 percent) means forgone mutual benefits in key sectors of comparative advantage – resources, critical minerals, energy, agribusiness, education, and high-value services.

As Non-Executive Chairman of Gowin New Energy Group (with international supply chains), Chairman of Infagen (Hong Kong) Limited (where my co-director is Nobel laureate Professor Barry Marshall) and a long-standing Adjunct Professor at Curtin University, I have witnessed the tangible mutual benefits of calibrated engagement. This includes introducing Professor Marshall’s Australian inventions into the PRC via JV companies for gastric cancer diagnostics and promoting bilateral education for mutual human capital and employment gains.

A more nuanced, risk-calibrated policy approach would better optimise capital flows and long-term mutual prosperity.

Helen Zhi Dent
Australia China Business Council (ACBC) NSW President
Patrick Mayoh
ACBC NSW CEO

These ABS figures are a sobering reminder that we are missing out on an important opportunity to attract Chinese investment into Australia. 

Today, the PRC’s share of all foreign direct investment in Australia has fallen to just 2.8 percent. This is a missed opportunity. 

We welcome the Australian government’s efforts to reinforce that Australia welcomes foreign investment in the national interest, including targeted outreach via roundtables with the Australia China Business Council, as well as China roadshow information sessions. 

The PRC can play an important role in supporting Australia’s economic prosperity, especially in renewable energy and decarbonisation projects. As Australia navigates a complex transition toward a net-zero economy, access to diverse, deep capital pools is essential – especially if we are to achieve any viable green iron projects. Foreign investment also facilitates stronger business / people-to-people links and knowhow transfer – particularly useful for Australia with the PRC leading on almost all zero emission technologies.

Dr Wei Li
Senior Lecturer in International Business, University of Sydney Business School

According to the University of Sydney and KPMG report released last week, Chinese investment in Australia fell by 28 percent in 2025, from US$862 million to US$623 million. In Australian dollar terms, it declined from AU$1.3 billion to AU$964 million, with only 24 completed transactions recorded. 

These numbers matter not because Australia cannot attract capital from elsewhere, but because they signal a deeper structural shift. Chinese investment has historically played an important role in sectors such as mining, energy, agribusiness, property and infrastructure. A continued fall points to changing investor confidence, geopolitical risk and narrower commercial channels between Australia and the PRC. 

This also comes as global FDI becomes more selective and increasingly concentrated in capital-intensive, technology-driven sectors such as data centres, advanced manufacturing and energy transition. UN Trade and Development’s (UNCTAD) January 2026 data show developed economies saw stronger inflows in 2025, with the European Union benefiting from a rebound in major economies such as Germany, France and Italy. Australia is therefore competing in a much more crowded market for long-term, productive investment.