Chinese investment in Australia, China's biggest outward investment destination, will continue to rise due to huge demand for resources and as state-owned enterprises become more commercially minded, an industry report said Wednesday.
China's investment in Australia is characterized by a focus on mining and energy, large deal sizes, state-owned dominance and a preference for investments with listed companies, according to a report by KPMG and University of Sydney China Studies Centre.
"Chinese SOEs overseas have shown strong commercial motivation, and they operate in a manner similar to many international companies," said Peter Fung, global chair of KPMG Global China Practice. The report noted that of the 11 major Chinese investors in Australia, only two are local SOEs, namely from Shanghai and Shandong, and the remainder are long-established central SOEs with a considerable track record of international activities.
Since June 2005, 116 completed deals were recorded by researchers, totaling US$45.1 billion invested by Chinese enterprises in Australian businesses, the report said. China's long-term commitment to the energy and resources sector comes with involvement in local infrastructure that creates potential for spill-over effects into other industries.
In the first half of 2012, investment flows reached US$5.7 billion after completion of several large-scale deals, including the merger of Yancoal Australia and Gloucester Coal and the acquisition of Anvil Mining by China's Minmetals.