A new analysis has found That Chinese investment in Australia has fallen by almost 50 per cent in a year, with poor relations between Canberra and Beijing contributing to a rapid fall in investor confidence, British media said.

Chinese investment in Australia fell for the third year in a row between 2018 and 2019, from A $4.8 billion to A $2.5 billion, researchers at the Australian National University found.

At the peak of 2016, Chinese investors poured A $15.8bn into Australia, the report said. Last year's figures were bolstered by China's A $1.5 billion acquisition of Tasmanian infant formula maker Bellamy Foods.

Australian National University professor Peter Drysdale says Australia has suffered a much sharper drop in investment than the global trend. Globally, Spending by Chinese investors fell 9.8 per cent, while spending by Chinese investors in Australia fell 47 per cent over the same period.

The report also said that most of the a $50bn or so invested by Chinese investors in Australia since 2014 had been spent before 2017.

In 2017, then-Prime Minister Malcolm Turnbull reportedly proposed changes to Australia's national security laws to counter what he called "unprecedented and increasingly complex efforts by foreign powers to influence the political process at home and abroad." Although China has not been singled out, this bodes ill for relations between the two countries. Relations between the two countries have sunk to a new low in recent weeks.

Drysdale says the sharp decline in foreign investment in Australia compared with other parts of the world suggests there are more factors behind the hesitation among foreign investors in Australia.

"As recent policy changes and actions may be seen as negative signals by Chinese investors, the investment environment may look less attractive, and the deterioration in political relations between the two countries has clearly had an impact."

Drysdale said he doesn't expect the trend to reverse anytime soon.

"China is a major source of foreign investment in the world and Australia relies heavily on foreign investment to develop its economy and strengthen market links. Now the space [for Chinese investment in Australia] is shrinking."