China trade threats leave Australia anxious amid worsening ties

In recent months, China has restricted or delayed imports of a range of products from Australia.
In recent months, China has restricted or delayed imports of a range of products from Australia.PHOTO: REUTERS

SYDNEY - Australia has been bracing for potentially devastating trade sanctions from China, leaving exporters anxious amid a steady deterioration of the ties between the two countries.

In recent months, China has restricted or delayed imports of a range of products from Australia, including beef, barley and wine - a punitive move many consider to have come in response to Canberra's call for an inquiry into the origins of the Covid-19 pandemic in April.

Officially, China has denied that its measures are politically motivated.

Some Australian businesses began reporting in recent weeks that they have been struggling to export their products to China or clear Chinese customs.

Earlier this month, news emerged that more than A$2 million (S$1.96 million) worth of live lobsters from Australia were sitting inside tanks on planes at Shanghai's Pudong airport. The shipments were apparently held up due to delays in clearing customs, prompting some Australian sellers to suspend their exports to China.

Following the lobster saga, Chinese media began to report that seven Australian products were set to be specifically targeted. Chinese traders were reportedly ordered to stop importing wine, lobsters, sugar, coal, copper ore and concentrate, barley and timber - a move that would take a serious toll on the Australian economy. Chinese officials have denied issuing the ban verbally.

An editorial in the China Daily last week - headlined "Canberra only has itself to blame" - said Australia had backed Washington's efforts to contain China and will "pay tremendously".

"If Canberra continues to go out of its way to be inimical to China … its economy will only suffer further pain as China will have no choice but to look elsewhere if the respect necessary for cooperation is not forthcoming," it said.

Analysts in Australia believe China did not want to admit to an official ban on Australian goods because it wanted to avoid being seen as breaching global trade rules. In addition, China's unofficial trade sanctions have been viewed as a form of psychological warfare.

"They (Chinese officials) leave it to you to guess," a former secretary of the Department of Foreign Affairs and Trade, Mr Peter Varghese, told The Sydney Morning Herald.

"They let you go through the process of thinking, 'What could we have possibly done to upset the Chinese?' They leave us to use our imaginations to think of what we might have done."

The new ban on the seven goods was reportedly due to start last Friday, but does not appear to have yet occurred.

Australia's Trade Minister, Mr Simon Birmingham, said earlier this week that Australian goods were still entering China.

"The types of rumours suggesting an outright blanket ban don't, at this point in time, appear to have materialised," he said.

"We continue to see certain shipments successfully being processed through Chinese customs."

But Canberra has struggled to address the rumours or to mollify Australian exporters because China has effectively frozen high-level contacts with Australia. Mr Birmingham, for instance, has been unable to contact his Chinese counterpart.

China is Australia's largest trading partner and accounts for more than a third of all Australian exports, making Australia one of the world's most China-dependent economies. In 2018-19, China bought A$153 billion worth of Australian exports. The second largest market was Japan, which bought A$62 billion. Singapore was the seventh-largest, buying A$16 billion.

Ties between China and Australia have deteriorated in recent years, especially since Canberra introduced laws to combat foreign interference - a move widely seen as aimed at Beijing. Australia has also criticised Beijing's conduct in Hong Kong, Xinjiang and the South China Sea, and was one of the first countries to ban Chinese telecommunications firm Huawei from involvement in the country's 5G network rollout.

Despite the parlous state of relations between the two countries, China has sent some conciliatory signals towards Australia in recent days.

China's Assistant Minister of Commerce Li Chenggang said on Wednesday (Nov 11) that it is up to Australia to improve the damaged relationship between the two countries.

"Australia should know more clearly than China what it needs to do to improve this relationship," he said at a press conference, according to Bloomberg.

Australia's government has been urging exporters to diversify and look to other markets beyond China.

The problem for exporters looking elsewhere, though, is that China is one of few countries with a currently growing economy.