Chinese and Australian national flags are seen at an event in Sydney, Australia. File photo: Xinhua

Australia's years of effort to constrain investment from China with its "semi-decoupling" tactics have paid off, after a report by KPMG and the University of Sydney showed that China's outbound direct investment (ODI) into Australia fell 62 percent during 2018-19 to $3.4 billion, the lowest level in a decade.

Chinese analysts said a weak investment landscape, even before bilateral ties soured as Australia moved to do the US' bidding to smear and harm China, signals worsening economic ties. 

Yu Lei, chief researcher at the Research Center for Pacific Island Countries with Liaocheng University, told the Global Times on Tuesday that Australia has followed "semi-decoupling" tactics concerning Chinese investment since 2017.

In practice, the Australian government will only approve investments that could lead to an increase of its exports to China, such as deals in the sectors of agriculture and animal husbandry, Yu said. 

"On the other hand, Chinese ODI and exports to Australia face strict scrutiny, with investment in the energy, transportation, and science and technology sectors virtually facing a stone wall," Yu said, predicting a further decrease in Chinese ODI in infrastructure.

Tian Guangqiang, assistant research fellow with the National Institute of International Strategy at the Chinese Academy of Social Sciences, said the decline has also been caused by anti-China, anti-globalization sentiment and the country's own economic stagnation.

Australia has been making political noise, demanding an independent inquiry into the COVID-19 outbreak in China, in a purposeful effort to smear and stigmatize China. Several Australian products such as beef and barley have run into problems in China.

Chinese experts said that in the past decade, a pattern began to emerge in Australia, where the government would roll out tighter investment regulations on certain areas when Chinese investment in those areas was active. A pattern of discrimination against Chinese businesses is obvious, they noted.

Yu said the Chinese people are fair-minded and Australia's "one-way free trade" tactics won't work. The Chinese government is likely to hit Australian exports to China to give Canberra the reciprocity it deserves. 

Liu Qing, director of the Department for Asia-Pacific Security and Cooperation at the China Institute of International Studies, said after a 36-percent decrease in the previous year, the current level of Chinese investment into Australia had reached a "negligible level." 

However, it seems absurd that China should let Australia's "I can make money out of your pocket, not the other way around" mentality go unchecked, Liu said, noting that Australia maintains a huge trade surplus with China.

China issued on Tuesday a warning to students about choosing or resuming studies in Australia, days after a similar warning on travel to Australia.

"Beef, barley, tourism, education and coal probably stand next in line," an observer familiar with China-Australia bilateral ties said.

"With the predicted decline in Chinese tourists and students, the country will see a decline in housing prices followed by a decline in overseas investment from China," Liu told the Global Times on Monday.

US-based Fitch Ratings in May revised Australia's long-term foreign-currency issuer outlook from stable to negative, citing risks posed by diplomatic tensions with China.

Australia represents a stable, high-quality destination for Chinese capital, the China Australia Chamber of Commerce said in a statement sent to the Global Times. 

"The reasons for investing in Australia ... we don't believe that they have changed, nor will they change in the coming years."