Pedestrians in Sydney's central business district

Sydney (AFP) - Chinese investment in Australia almost halved in 2019, new data released Monday showed, as relations between the two countries deteriorated.

Researchers from the Australian National University said Chinese investment Down Under plunged from Aus$4.8 billion (US$3.5 billion) to just Aus$2.5 billion last year.

Professor Peter Drysdale, who led the data research, said the Aus$1.43 billion purchase of infant formula producer Bellamy’s Australia by China’s Mengniu Dairy accounted for more than half of that investment.

It was the third consecutive year that Chinese investment in Australia dropped since peaking at Aus$15.8 billion in 2016.

The steep fall far outpaced a global decline in China’s overseas ventures of 9.8 percent last year, reflecting the bilateral political tensions, Drysdale said.

”(In) the last few years, clearly Chinese investors have found the investment environment in Australia less certain and have been more cautious about undertaking investment in Australia,” he told AFP.

In June, Australia announced tougher measures to block or overturn new foreign investments deemed to compromise national security – a move widely viewed as an effort to limit growing Chinese influence.

The country has barred Chinese telecoms giant Huawei from being a major player in its 5G rollout owing to concerns about its relationship with state security agencies, a decision that riled Beijing.

Drysdale said structural changes were also partly to blame, with Chinese investors retreating from mining and resources as the commodity boom weakened.

While Chinese investment in Australian real estate and agriculture also fell in 2019, the ANU researchers found some “modest gains” in the construction, education and finance sectors.

Drysdale said it was important for Australia to consider how to reverse the “continuing downward trend” due to the key role of foreign investment in supporting economic growth and trade.

“Whether that can be changed quickly or not is another question altogether because it very much depends on how purposeful (an) approach there is to mending the relationship between the two countries,” he said.

Sino-Australian relations have nosedived in recent months after a series of diplomatic clashes.

Beijing was particularly infuriated by Canberra’s role in international calls for a probe into the origins of the coronavirus pandemic, which emerged in the Chinese city of Wuhan.

China – Australia’s biggest trade partner – has since imposed tariffs on Australian products from beef to barley and has discouraged Chinese students and tourists from heading Down Under.