Researchers in the US found that, since 2000, Australia has been one of the biggest beneficiaries of Chinese credit. Most of the money went to the resources sector. The report shows that Australia received $200 billion over the period, making it the third highest recipient after the United States and Russia. At the same time, though, worries about the national security risks of China’s investments have grown. This is alongside a slowing of credit inflow into Australia.
Money Went to Roads, Mines and Many Businesses
A study has revealed the extent of China’s lending for projects and activities in Australia. Money poured into everything from roads to supermarkets, wind farms, and breweries. But most went to mining projects. The Chasing China study was published this week by AidData. This is a research lab at the US university William & Mary. It tracked $3.41 trillion worth of loans and grants across 200 countries from 2000 to 2023.
It found Australia received $200 billion during that period. This was the third most of any country behind the United States and Russia. Among the about 1,350 entries in the lab’s database are loans to Australian companies such as Qantas, Woolworths and Fosters Group. The database also includes companies based in China and other countries with interests here.
Australia Got the Most Foreign Direct Investment Lending
Brooke Escobar is associate director of AidData’s Tracking Underreported Financial Flows team. She is a co-author of the report. She said Australia was the number one country for foreign direct investment lending during the period. FDI includes brownfield investments. These are mostly lending for buying existing companies and assets. It also includes greenfield investments for building new companies and assets.
FDI lending represents more than three-quarters of China’s official sector lending portfolio in Australia, Escobar said. Australia has received Chinese FDI loans worth more than $100 billion. The US has received less than $75 billion. Most loans to Australia went towards industry, mining and construction. This was 63 per cent. Energy got 15 per cent. Transportation got 11 per cent. The rest went to finance and banking, internet and communications technology and other sectors.
China Now Lends More to Rich Countries
China has traditionally been viewed as a creditor for developing countries via the Belt and Road initiative. However, increasingly, China is lending to advanced economies. It supports strategic infrastructure and high-tech supply chains in areas such as semiconductors, artificial intelligence and clean energy. As stated, over three-quarters of its overseas lending operations now support projects and activities in upper-middle-income countries and high-income countries.
Brad Parks is executive director at AidData and the lead author of this report. He said that the scale and scope of Beijing’s lending portfolio were way larger than previously understood. He added that the overall size of China’s portfolio is two to four times larger than previously published estimates suggest. Much of the lending to wealthy countries is focused on critical infrastructure, critical minerals, and buying high-tech assets, like semiconductor companies.
China Remains World’s Biggest Lender
China has been a major source of funds to the developing countries through the Belt and Road project. Nevertheless, more and more we see China giving loans to rich countries. It helps them to build up their infrastructures and to maintain the supply chains in cutting-edge technology areas such as semiconductors, artificial intelligence, and clean energy. That is to say, more than 75% of the foreign lending activities by China are directed towards projects and the initiatives in upper-middle-income countries and high-income countries.
In 2023, Beijing spent more than Washington on a more-than-two-to-one basis. It spent nearly $50 billion more than the World Bank, the single largest multilateral source of aid and credit. Data for Australia shows a surge in lending during the mining boom, with a massive spike in 2008 when China’s Chinalco spent billions to buy a stake in British Australian mining giant Rio Tinto.
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