These are among the key features of the latest annual report in a series started in 2011 by KPMG and Sydney University. It will be launched in Beijing today by Trade and Investment Minister Steve Ciobo.

 

Doug Ferguson, partner in charge of Asia and international markets for KPMG, told The Australian that this marks a return to growth after two years of slightly declining investment figures — to the second highest annual total ever, after the aberrant year of 2008 when Chinalco paid $US14bn for a 9 per cent stake in Rio Tinto.

 

The growth is also reflected in the greatly increased number of deals, Mr Ferguson said — reflecting a shift from the former dominance by state owned enterprises, which tended to focus only on massive acquisitions. In terms of deal numbers, 78 per cent of the total — 65 — came from private Chinese firms.

 

Mr Ferguson said there had been a big transition from mining, which in 2015 took just 10 per cent of the total, into new industries including agriculture, with 12 deals completed.

 

By far the biggest overall recipient was NSW with $7.4bn, 49 per cent of the total, followed by Victoria with $5.1bn, 34 per cent. The other states and territories’ proportions were in single digits, with Chinese interest in the Northern Territory rising — four deals worth $564 million — and in Western Australia, for long the epicentre of Chinese investment, now down to a single deal worth $114m.

 

Australia was in 2015 the second largest destination for Chinese offshore investment after the US, confirming its status that it also holds in accumulated investments over the last decade, totalling $105bn.

 

The rise in direct investment to Australia was more than double the rate of the rise in China’s total foreign direct investments to all destinations last year, which was up 14.7 per cent to $157bn.

 

The minimum investment for consideration in the survey was $US5m ($6.6m), so house purchases by Chinese buyers are not significantly included. The report does not cover portfolio investment either.

 

There were seven deals worth more than $500m each. Commercial property comprised 45 per cent of the total amount invested.

 

“Also for the first time, a lot of money has gone into health.” The new report is to be subtitled The new normal: health, happiness, lifestyle and services.

 

The biggest health deals were Biostime’s $1.38bn acquisition of Swisse Wellness, and Luye Medical Group’s takeover of Archer Capital’s Healthe Care for almost $1bn. The biggest infrastructure deal was Landbridge’s controversial 99 year lease of Darwin’s port for $506m.

 

There were two large investments by government enterprises: Pacific Hydro’s broad portfolio of wind farms and hydropower projects were bought for $3bn by State Power Investment Corporation, and China Investment Corporation paid more than $2.45bn for Investa Property Group’s portfolio of nine office towers.

 

The new pattern now emerging, Mr Ferguson said, was one in which Chinese investment had “a much broader impact, with greater job creation and better long-term integration into the Australian economy.”

 

Executives were interviewed at 11 Chinese companies — six SOEs and five private firms — that employ in total just over 8000 Australians, and 58 expatriates from China. Despite claims that such investors are more focused on parking money overseas than on gaining a return, Mr Ferguson said: “They are very concerned about profit. We’ve seen at KPMG, in our day-to-day business, how cautious and thorough they have become in their due diligence.”

 

In the past, he said, “they were just keen to complete the deal. But now we’re seeing, especially with SOEs, enormous scrutiny, with oversight increasing to ensure they conclude sensible arrangements.”

 

Mr Ferguson said the interviews showed “they were having quite a challenge at first learning how to work with non executive directors and with trade unions.

 

But at the employee level they seem quite comfortable with the quality of their Australian employees, with 60 per cent saying they found them easy to work with.”

 

 

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