A number of key drivers will likely shape the landscape of Chinese investment into Australia over the next 12 months:

• Recent Foreign Investment Review Board (FIRB) changes run the risk of adding to the cauldron of uncertainty for prospective foreign investors into Australia. A balanced perspective is needed. As often reinforced, Australia remains “open for business” and investment applications “that protect and support Australian business and Australian jobs” will be prioritised. Recent trends suggest that the review of foreign investment applications continue to be timely. Let’s hope that the current geopolitical clouds do not get in the way of investments that are right for our economy 
• The door is not shut on Chinese investment in Australia. It’s now more important for Chinese investors to demonstrate the value they could bring to a transaction and beyond. Closer scrutiny will be placed on their investment thesis and how it will be accretive to Australia’s national interests. Perhaps more than ever before, transparent dialogue will become key to successful transactions
• The recalibration of China’s investment mandate, following President Xi Jinping’s 14th five-year plan, pivots toward clean, green, and sustainable investment opportunities. This, coupled with refreshed support for private owned enterprises, may provide further impetus for re-engaging with corporate Australia in a new manner. Joint ventures and other China-Australia corporate alliances that leverage respective strengths may provide new trading opportunities under President Xi’s five-year plan.
• The existing world of social distancing and travel bans will inevitably throw some interesting challenges toward cross-border transactions. For some cultures, the absence of face-to-face dialogue may prove confronting. But we are an adaptable race. New technology video conferencing and complementary technology, such as Deloitte’s Virtual M&A Deal Room and iDeal (M&A Analytics tool) are practical solutions that have readily addressed some of these potential impediments. 

Notwithstanding the severity of the current economic situation, we see that some green shoots are already emerging. This may just be the catalyst that was required to change the way in which we engage with foreign pools of capital as we embrace the new normal. 

Without doubt, we are due for a bumpy ride in the coming months as we emerge from the shadows of COVID-19 and transition to the ‘new normal’. As natural geographic partners, there should be a continued impetus for Chinese cross-border transactions — Australia has the resources and consumer goods that China requires and China has the foreign capital that Australia needs. The opportunity to harness our interdependence with China for the longer-term benefit of both economies remains significant.

Read the next blog in our M&A series on Capital raisings and defensive stratgies during COVID-19.
Or download our full The deal in focus report for data findings and insights from our interviews with ASX200 M&A leaders.