In an extraordinary turnaround, Australian investment in China has almost tripled while Australian inbound investment from China has dropped by half, according to this year's Asialink Index.

Speaking in Sydney, the Australian Minister for Foreign Affairs, Senator Bob Carr revealed that since 2009 Chinese investment flows into Australia have been in decline in stark contrast to widespread Australian perceptions that foreign investment is flooding into the resource rich country.

The latest Asialink Index, an annual assessment of Australia's growing economic relationship with Asia, is calculated by PricewaterhouseCoopers (PwC) and the Asialink Melbourne Institute and is a critical barometer in Australia's measurement of its economic temperature.

The index has revealed Australia's economic relationship with China moved ahead at a blistering pace, growing by 53.5 per cent in 2011.

"The recent increase in Australia's investment into China is encouraging as it demonstrates that Australian businesses are preparing to commit to deeper engagement, beyond exports, for the longer term," PWC Partner Tim Cox said.

This impressive growth in outbound investment, up by an astonishing 278 per cent in 2011, highlights the two-way engagement of Sino-Australia economic ties, which have reached well over $100 billion over the last two years.

However, while Australian investment in China now amounts to about $16.9 billion, Chinese investment in Australian projects fell by 51 per cent.

Australian cash injected into China is now just $2 billion short of the flow of funds the other way.

China has been at the heart of Australian debate regarding the flow of foreign capital into energy and mining markets with a growing focus on agricultural investment.

Mr Cox said the data highlights the lack of understanding regarding two-way investment.

"It also provides important context for some community concerns about Chinese investment in Australia," He said.

The index shows Australia's engagement with Asia increased by eight per cent over the past five years, whereas engagement with the rest of the world declined by 13.3 per cent.

Asialink CEO Jenny McGregor told Xinhua that the Asialink Index provides clarity and cut through for Australia's relationship with Asia and also illustrates where the work is needed.

"The dramatic rise in engagement is good news for Australia." She said.

Ms McGregor highlighted the finding that engagement with ASEAN had been relatively flat over the past five years.

"As well, the measurements of our economic relationships with Japan and Korea are down from positions of relative strength," he said.

Speaking at the annual Asialink Chairman's Lunch, Foreign Minister Bob Carr also said Australia was finally taking its position as part of a wider Asia.

"We need to get in a state of mind where consultation with Asia is second nature, just as much as it is with our friends in Washington and I think we're getting there," He said.