However Australian investment in Chinese bond and equity markets, which he said the Chinese authorities had been actively encouraging, was minuscule.

"Despite the significant size of China’s onshore capital markets, foreigners own only around 2–3 per cent of these securities."

One area the authorities had been focused on in recent years was enhancing China’s Stock Connect and Bond Connect programs, which have enabled foreign investors to access Chinese onshore bonds and equities through brokers and clearing facilities in Hong Kong.

"Following the growth of these programs, major index providers have announced that they will increase the weight of China’s onshore equities and bonds in their benchmark indices."

He expects Australia will play an increasing role in such investment.

"The trading relationship between Australia and China has historically attracted much attention, the financial links between Australia and China have also deepened over the course of the past decade."

"These connections are likely to continue to grow for a number of reasons, including the further gradual opening up of China’s capital account. In turn, this opening will provide additional opportunities for both Australian and Chinese businesses, whether as a source of new capital or as destination for new investment flows."


He said the growth of Australian investment in mainland China had reflected an increase in loans and deposits of Australian banks and also purchases of Chinese bonds and equities by Australian investors.

Since 2005, annual Chinese direct investment in Australia has averaged 0.7 per cent of Australian GDP. However the Chinese authorities have limited outbound investment in certain sectors, such as real estate and tourism, which has had some effect on recent Chinese investment in Australia.

In 2018 proposed Chinese investment in Australian real estate of all kinds halved to $15.2 billion as internal capital controls and new taxes crimped demand, according to the latest Foreign Investment Review Board figures.

Dr Kent also said the growing trade ties with China had contributed to a steady increase in the use of the Renminbi currency as an invoicing currency in trade.