Chinese investment almost halves in one year to just $2.5 billion

Chinese investment in Australia peaked at $15.8 billion in 2016, but was just $2.5 billion last year and is expected to drop again in 2020.

A single investment - the sale of Bellamy's baby formula company to Chinese dairy company China Mengniu, made up more than half of the total investment at $1.5 billion.

The Chinese Investment in Australia database tracks direct investment in Australia, in industries like mining, construction and real estate and education, but not things like trade and exports to China.

Researchers have been collecting the data for six years, in partnership with the Australian Treasury and other departments, showing the real estate sector had the biggest proportion of investment, at 24 per cent, and mining next at 21 per cent.

Head of the the East Asia Bureau of Economic Research at the university, Peter Drysdale, said Chinese investment overseas dropped 9.8 per cent globally in 2019, but the drop in Australia was sharper than elsewhere.

China is the biggest source of external investment around the world, and has been important to Australia with projects that are capital intensive.

The drop in investment couldn't simply be chalked up to the deteriorating political relationship between the two countries, Professor Drysdale said.

"There's a number of factors at play here, it's more complicated than that."

But the pandemic and Australia's call for an inquiry into the origins of COVID-19 may take a role going ahead.

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Since the pandemic and its effect on the economy, the government has announced that all foreign investments, no longer what value, would need approval before going ahead.

"The expectation will be this trend will continue unless there's a sharp reversal in the investment environment, one cant say how rapidly investment will come back," Professor Drysdale said.