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The United States is the top recipient of Chinese investment. Australia, though, is closing in fast. There, Chinese companies are on a shopping spree. They're buying up property, infrastructure and farms. NPR's Rob Schmitz reports.
ROB SCHMITZ, BYLINE: At the wine tasting room of Taylors Wines in Sydney, bottles are uncorked, poured, swished, sniffed and sipped. There's a lot for employees to toast this year.
MITCHELL TAYLOR: The Australian wine sector is growing at a very fast rate.
SCHMITZ: Mitchell Taylor is the winery's managing director.
TAYLOR: And what is exciting, at the top level of about $20 to $30 a bottle and above, that segment is growing at 53 percent.
SCHMITZ: Thanks in part to China. Five years ago, the biggest importer of Australian wines were the U.K. and the U.S. Now it's China. And exports of wine to China are growing at 40 percent per year. In the past year, Chinese investment in Australia's agricultural sector has tripled from 300 million to nearly a billion dollars, an unprecedented investment boom.
TAYLOR: We're very excited about this agricultural boom that is starting to happen now not only in the wine sector but in so many agricultural industries. And I really believe it's due to having that access, being on the - you know, the same time zone as China, being able to provide that clean, green, positive image that Australia presents.
SCHMITZ: And for China, this presents a way to feed the world's largest and fastest-growing consumer class. James Laurenceson is an economist at the University of Technology Sydney.
JAMES LAURENCESON: Chinese investors want a piece of that action.
SCHMITZ: Last year, Chinese homebuyers bought up to a quarter of the new housing stock in New South Wales, Australia's most populous state. In the past few years, Chinese companies have either leased outright or bought significant shares of the Australian ports of Darwin, Melbourne and Newcastle. It's the same story for agriculture, says Laurenceson.
LAURENCESON: I mean, they're the ones who can see it most clearly, right? They're seeing Australian wine to China going up by 40 percent last year, beef, dairy products, everything. So they see profit opportunities. And at the same time, rural Australia is - has this chronic shortage of capital.
SCHMITZ: And that's why China has replaced the U.S. as the second-largest foreign owner of agricultural land in Australia. The U.K. is No. 1. Two years ago, a Chinese agricultural company named Dakang offered to buy Australia's largest cattle ranch. The Kidman ranch makes up 2 percent of Australia's farmland. It's the size of South Carolina.
LAURENCESON: The original Chinese bid was the 100 percent of Kidman. It got rejected. The treasurer said it was against the national interest. There was another deal, 80 percent, also got knocked back as still not in the national interest.
SCHMITZ: Public opposition was strong to a Chinese owner of such a big chunk of Australia. A poll taken by Australia's Lowy Institute showed 80 percent of those surveyed oppose foreign investors buying Australian land. In the end, the Australian government approved the deal only when Dakang knocked down its offer to a third of the ranch. But the Kidman deal hasn't slowed Chinese investment in Australia's farmland. University of Sydney professor of Chinese business management Hans Hendrischke says it's only changed the way Chinese investors do business down under.
HANS HENDRISCHKE: The Chinese investors will essentially have to bundle properties and assets to get the volume. There's all these stories around about the Australian vineyard where some Chinese buyer comes up and says, well, let's take the annual harvest and put it in a container and off they go.
SCHMITZ: Hendrischke says this trend will speed up the inevitable - the buying up of 135,000 family farms and their transformation into large-scale corporate farms, many of which will be devoted to feeding the world's largest consumer class. Rob Schmitz, NPR News, Sydney.
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