China accused of targeting cotton in latest curbs against Australia

Aussie sector's officials say Chinese spinning mills being discouraged from using its cotton

SYDNEY • China has now started targeting cotton imports, Australian producers said yesterday, adding to an ever-expanding list of products targeted by Beijing as relations between the two countries continue to sour.

After measures aimed at the coal, wine, beef and barley sectors, industry officials said it had become clear that "China has recently been discouraging their country's spinning mills from using Australian cotton".

China is the biggest buyer of Australian cotton. The value and volume of Australia's cotton exports are volatile, but are currently worth around A$1 billion (S$963 million), a year after benefiting hugely from a hike in Chinese tariffs on United States-produced cotton.

Australia's Agriculture Minister David Littleproud called for the Chinese authorities to provide clarity on the situation and noted fair trade obligations under the World Trade Organisation.

An Australian government source, briefed by Australian officials in China, told Reuters: "The millers essentially get a quota they can import, and essentially they're being told they might not get their quota next year if they buy our cotton."

If Chinese millers continue to buy from Australia, they could be hit with a tariff of 40 per cent, added the source, who sought anonymity as he was not authorised to speak on the matter.

Relations between Beijing and Canberra have worsened in recent years, with China appearing increasingly willing to use a range of economic and political tools to demonstrate the cost of poor relations.

Canberra has accused China of meddling in its domestic affairs, and relations were further strained when Australian Prime Minister Scott Morrison sought an independent inquiry over the origins of the coronavirus that emerged last year in the Chinese city of Wuhan.

The countries have clashed repeatedly, with Australia objecting to heightened political repression inside China and with Beijing more aggressively flexing its political, military and economic muscle in the Asia-Pacific.

Australian journalists have been hauled in for questioning in China and forced to flee the country; an Australian citizen has been detained on espionage charges; and Beijing has told its people not to visit Australia for study or tourism, alleging anti-Asian racism in the wake of the coronavirus pandemic.

Many of China's trade measures against Australian goods have not been officially confirmed or fully detailed, heightening speculation that Beijing is waging a shadow trade war.

"We are an open trade nation but I am never going to trade our values in response to coercion from wherever it comes," Mr Morrison said earlier this year.

  • $963m

    Value of Australia's cotton exports, a year after benefiting hugely from a hike in Chinese tariffs on US-produced cotton. China is the biggest buyer of Australian cotton.

Cotton producers and exporters said they were trying to get clarity on the new rules of the game, but indicated they may look to other markets.

"Despite these changes to our industry's export conditions, we know Australian cotton will find a home in the international market," said Mr Adam Kay, chief executive of Cotton Australia, and Mr Michael O'Rielley, chair of the Australian Cotton Shippers Association.

AGENCE FRANCE-PRESSE, REUTERS

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A version of this article appeared in the print edition of The Straits Times on October 17, 2020, with the headline China accused of targeting cotton in latest curbs against Australia. Subscribe