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China tensions cast shadow on investment

Trevor Chappell

Chinese investors have become more cautious about pursuing deals in Australia as a result of heightened political tensions between the two countries, a new report says.

A report from the University of Sydney Business School and financial services firm KPMG says there is a higher level of apprehension among Chinese investors towards Australia because of political debate and diplomatic tensions, a perceived decline in support from the Australian government, and little support among the media.

The report says only 35 per cent of 45 Chinese companies that were surveyed felt that they were welcome to invest in Australia - down from 52 per cent in 2014.

Professor of Chinese Business and Management, Hans Hendrischke, says the last three years have been financially favourable for Chinese investors in Australia, as they gain familiarity and confidence in the Australian market.

"While most Chinese investors retained a level of optimism about their Australian investments, some investors are apprehensive due to diplomatic tensions and the sense of feeling unwelcome," Professor Hendrischke said.

The report, Demystifying Chinese Investment in Australia, said Chinese investment in Australia fell 11 per cent to $US10.3 billion in 2017, from $US11.5 billion in 2016.

Chinese investment in the United States in 2017 took a sharper fall, with investment in the US down 35 per cent from 2016 as offshore Chinese investment globally slid by 29 per cent in the year.

KPMG Australia's Head of Asia and International Markets, Doug Ferguson, said while the trade relationship was tense at present, Chinese investors were focused on acquiring assets, knowledge and technology that they could then leverage into the huge Chinese market to grow their business long term.

"Australia stands to make sustained economic, social and diplomatic gains by nurturing long-term partnerships between Australian companies and Chinese investors," he said.

CHINESE INVESTMENT IN AUSTRALIA:

* Mining was the largest sector for Chinese investment in Australia in 2017, followed by commercial real estate, and investment in the healthcare sector is surging.

* NSW attracts 42 pct of investment, Victoria 36 pct, and Western Australia 14 pct.