The benefits of Chinese investment in Australia
Partners in prosperity
Foreign investment has been, and will continue to be, fundamental to maintaining the standards of living that Australians enjoy. This report highlights the significant benefits Australia receives from foreign investment and the opportunities presented from new sources of investment from China.
Investment is key to any country’s growth. It fuels productivity, provides employment and expands the economy. These benefit flow through to the entire community, who benefit through higher wages, and greater choice of products.
The profits generated by the investment also create additional tax revenues that in turn lead to the provision of increased government services (or reductions in tax burdens elsewhere). When investment has a foreign source there are further benefits that can be generated, including the opening up of businesses to global supply chains and new international markets, as well as exposing firms to new technologies. Put simply, foreign investment has been, and will continue to be, fundamental to maintaining the standards of living that Australians enjoy.
At one level these statements are relatively uncontroversial: economists and policy makers accept the need for foreign investment to boost Australia’s productive capacity and realise the natural comparative advantages we possess. Indeed, the current debate over the company tax rate explicitly recognises the need for Australia to be competitive in attracting global capital. However, the community more broadly has not always welcomed foreign investment uncritically.
This report by Deloitte Access Economics for the Australia China Business Council and sponsored by ANZ, seeks to inform this debate by highlighting the significant benefits that Australia receives from foreign investment. The report focuses on the opportunities presented from new sources of investment from China, a country that will continue to be key to Australia’s prosperity into the future, and draws on three recent examples of Chinese investment to demonstrate how the in-principle benefits of foreign investment.
Chinese investment in Australia quadrupled in value between 2010 ($19 billion) and 2016 ($87 billion). Importantly, the majority of new Chinese investment is in services and consumption-led activities such as health, tourism and agribusiness, assisting Australia in its transition to towards broader sources of growth. Chinese investment is more than just a source of capital, it brings knowledge and connections. Australia has much to gain, but we cannot go it alone.