Australia-China trade disputes in 2020

SINGAPORE: China is Australia’s largest trading partner and the main export destination.

Australia is one of the few developed nations on Earth that exports more to China than it imports from China. In fiscal year 2018-2019, China captured approximately 32.6% of all Australian exports, or about A $ 153.2 million ($ 116.79 million). By far, the largest export was iron ore.

The relationship between the two countries has deteriorated since Australia backed a call for an international investigation into the manipulation of coronavirus by China, which was first reported in the Chinese city of Wuhan. Last month, the Australian media reported that the Chinese embassy there had threatened the Australian government and handed over a list of alleged offenses in Canberra.

China has taken a number of measures this year to curb Australian imports, ranging from tariffs to bans and restrictions. Here’s a look at the affected Australian export sectors:

In May, Beijing launched 80.5% anti-dumping and anti-subsidy duties against Australian barley, a move that effectively shut down Australian barley producers outside the Chinese market. The Chinese trade ministry said an investigation that began in 2018 confirmed that Australia had dumped barley, which allegedly caused significant damage to China’s domestic industry, Reuters reported.

Australian government officials have denied the allegations and said the country’s farmers are among the least subsidized among OECD countries. Canberra has also asked the World Trade Organization to meditate on the dispute. Experts expect the dispute to take some time to resolve.

China suspended imports from six Australian beef suppliers, with the last ban earlier this month, according to Australian media. For the first five bans, China would have cited labeling issues and health certificates.

Local media also reported this month that Australian lamb exporters said they were unable to return to the Chinese market under Covid-19 restrictions and that exports of honey, fruit and pharmaceuticals to China are in jeopardy. .

China has banned the import of timber from the Australian states of Queensland, Victoria and, more recently, from South Australia and Tasmania.

“Chinese customs have detected many cases of live pests in timber imported from Australia since January, such as longicorn and buprestid beetles. These live pests, if allowed in China, will seriously endanger forest production and ecological security. of China, “said the spokesman of the Chinese Foreign Ministry. Wang Wenbin said at a November 2 press conference following reports of a ban on log exports from Queensland.

“China has notified the cases to the Australian side and has asked Australia to investigate and take steps to prevent recurrence,” he said.

Chinese media have said the country’s top economic planner granted approval to power plants to import coal without authorization restrictions, except for Australia, Reuters reports. This followed previous reports that Beijing verbally warned public utility and steel companies to stop importing Australian coal.

Coal is Australia’s third largest export to China. But the percentage of coal exports to China has been declining over the years, according to analysts who say Australian exporters have found additional buyers in places like South Korea, Vietnam and Japan.

Local media reports in November said tons of live locusts were stranded at Chinese airports and clearing houses, awaiting inspection by Chinese customs officials.

The Australian Seafood Trade Advisory Group said last month the industry temporarily halted lobster exports to China and was working with Chinese and Australian authorities to respond to Beijing’s new border inspection protocols. The group said it was also planning to find other destinations for locusts, including Australia’s domestic market.

Despite export restrictions and levies on previous sectors, Australia’s economy has remained relatively affected by Beijing’s moves. This is likely because China has not yet imposed any restrictions on Australia’s largest export to the country: iron ore. Prices have risen to record levels in recent weeks.

Given China’s dependence on iron ore brought by Australia, coupled with an increase in appetite for it due to aggressive industry-driven stimulus, trade in iron ore is unlikely to be significantly affected, according to analysts at National Australia Bank.

“Almost half of Australia’s exports to China are iron ore. Goods subject to tariffs or other restrictions make up a small part of global GDP, although it is important that it has significant regional and sector-specific impacts,” they said. say analysts in a December 14 note. .

But they warned that Australia’s tourism and education industries, which depend on Chinese students and tourists, could be affected if Beijing’s attitude towards them is transformed once the borders are opened.