End of “Going Out”?

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In my opinion, China’s “Going Out” strategy, which began at the turn of this century and was a significant focus of the 12th Five Year Plan (2011-2015), which encouraged Chinese companies to ‘go global’ and learn and experience how to do business in the western world, was the single most important factor in driving GDP growth in western economies for at least the last decade (or more). It also created several new millionaires and a few billionaires along the way. The fact that it is now tailing off, for a wide range of political and economic reasons, is going to be felt everywhere in the world at a time when we can least afford it, post Covid.

Here in Australia, we have just witnessed a fall of 58% in Chinese investment (from A$8.2 billion to A$3.5 billion) in 2019 according to the latest annual Demystifying Chinese Investment into Australia report published by KPMG and the University of Sydney. The acquisition of Bellamy’s Australia for A$1.5 billion by Mengniu Dairy Company was the largest transaction and accounted for 43.7% of total Chinese investment in 2019, making Tasmania the region with the highest percentage of chinese investment for the first time ever!

I always looked forward to receiving my copy of the “Demystifying” report and, this time last year, reflected a worrying trend in the 2018 figures which, after a period of stability, showed a fall of 36.3% and suggested that “this latest number for 2018 should be a catalyst for a more balanced debate about the national interest”. It seems nobody (at least amongst the powers that be) was listening and now these numbers have fallen off a cliff. I don’t need to spell out some of the reasons for this but I can only hope and assume that when the true economic fallout from the Covid economic crisis is felt throughout the nation (which may not be until later this year) some attention will be paid to the critical importance of the Australia-China relationship. Until then, we will continue to live in a parallel universe!


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