Australian exporters scramble as fears of more China trade bans grow
The Morrison government has accused China of heightening trade risks and breaching Xi Jinping’s own public pledges as a range of Australian export sectors brace for new disruptions as soon as Friday.
Guardian Australia understands some Australian wine exporters have suspended shipments to China, based on requests from their Chinese import partners, amid fears officials in Beijing are about to press ahead with bans on a raft of goods.
Lobster exporters have also been trying to clarify the hold-ups they have experienced since late last week.
While the trade minister, Simon Birmingham, hit out at Beijing for sending “continued uncertain and inconsistent messages”, some Australian-based analysts argued the Chinese government was engaging in “psychological warfare” by flagging vaguely defined potential sanctions that may or may not eventuate.
The state-run Global Times published an article late on Wednesday saying Australia was nervous about losing access to the Chinese market after China “halted seven categories of Australian goods from the market”.
The article did not provide new details but treated the development as fact, even though China’s commerce ministry had earlier in the week dismissed “rumours” of potential disruptions to Australian wine, lobster, sugar, coal, timber, barley and copper from Friday onwards.
The apparent confirmation of looming trade actions coincides with the third China International Import Expo, which is being held in Shanghai this week.
Xi, the Chinese president, reportedly told the opening ceremony he aimed “to turn the China market into a market for the world, a market shared by all, and a market accessible to all” in order to “bring more positive energy to the global community”.
But Birmingham said the inconsistent messages from China about what was happening with Australian exports were “heightening risks” and also undermined “the statements made by President Xi” at the import expo.
“If China is to be true to the statements of its government then it should provide confidence that normal customs and related processes will apply to imports of goods such as seafood and wine,” Birmingham said in a statement.
Hours before Birmingham issued the strongly worded statement, Scott Morrison, the prime minister, told reporters: “China has denied that is what they are doing and I can only take that at face value out of respect for the comprehensive strategic partnership we have with China.”
Dr Jeffrey Wilson, a trade expert who is the research director of the
Perth USAsia Centre at the University of Western Australia, said he believed China’s tactics were a case of “greyzone” diplomacy.
“The ambiguity is by design,” he said.
“It’s not a trade war, it’s psychological war.”
Wilson said the uncertainty was “principally designed to strike fear into a large number of Australian companies … that their shipments to China might not get cleared”. China is Australia’s number one trading partner, making up 33% of Australia’s total exports.
Sowing that fear, he said, would “provide additional ballast” to those commentators who were pressing the Australian government to soften its stance towards China in an effort to “fix” the relationship.
Wilson said the moves also sent a message to import partners who may be thinking of doing business with Australian exporters at the trade fair this week.
Richard McGregor, a senior fellow at the Lowy Institute, said China wanted Australia to pay a price for their political disagreements, especially the call for the international inquiry into Covid-19.
“Whether or not the hard ban goes into place on Friday, Chinese importers of all sorts of goods have been sent an unmistakeable signal by the [Chinese] government, that it is pointless building business ties with Australia, because they can be interrupted overnight because of politics,” McGregor said.
“So even if business doesn’t stop this week, it is going to come to a stop at some point, so why bother investing in the relationship.”
Guardian Australia understands wine exporters have still not had anything officially confirmed, but several have suspended shipments to China to avoid any risk at the border. This step was taken at the request of importers.
However, one of Australia’s biggest operators, Treasury Wine Estates, which makes Penfolds, is believed to have continued business as normal with China this week.
Shares in Treasury Wines Estates fell by 8% on Thursday, after it informed the stock market it had become aware China’s domestic drinks industry was lobbying Beijing to impose retrospective tariffs on Australian wine.
That domestic request was associated with an ongoing anti-dumping investigation into Australian wine that was launched by China’s commerce ministry in August and is scheduled to take up to 12 months to complete.
Wilson questioned how it would even be possible for authorities to implement back-dated tariffs on products that had cleared customs, been sold and consumed.
“I’ll be honest with you: I have a PhD in trade policy from the Australian National University and I’ve never heard of retrospective tariffs in my life,” he said.
While Australian and Chinese officials continue to talk through diplomatic channels, Australian ministers have reported being unable to reach their Chinese counterparts for several months. Birmingham said earlier this week that this situation had not changed but the Australian government remained keen for dialogue.
China’s embassy in Australia has not commented directly on the potential new trade actions but has referred Guardian Australia to comments from the foreign ministry spokesperson on Tuesday “that the Chinese authorities take inspection and quarantine measures on imported products in accordance with laws and regulations”.
China’s foreign ministry urged Australia to “bring the bilateral relations back to the right track”.