BEIJING (BLOOMBERG, REUTERS) - Australia's winemakers have been hit by a second Chinese government probe, as trade tensions between the countries escalate.
China's commerce ministry said in an online statement the anti-subsidy investigation was launched on Aug 31 after a request from the China Wine Industry Association which said the wine imports had received subsidies from the Australian government.
The investigation will be on "wines in containers holding 2 litres or less", and should be completed within a year or be extended to end-February 2022 under special circumstances.
The ministry also said that it would be investigating 37 subsidy items granted by the Australian government to its wine industry players, including "farm risk management", "farm financing loan scheme" and "business growth funding projects".
Australian Trade Minister Simon Birmingham said the second wine probe had been "broadly foreshadowed" when the initial anti-dumping investigation was initiated.
"We strongly refute claims that initiatives like the Murray-Darling Basin Economic Development Programme, or programmes that support research and development equate to a subsidy of our wine exports," Mr Birmingham said in a statement, referring to a scheme where the government buys water to improve the health of key waterways.
"The government will work with our internationally renowned wine industry to mount the strongest possible case against these claims," he added.
Shares of Australia's biggest winemaker, Treasury Wine Estates, were trading flat on Monday afternoon, in line with the broader market, although the shares are down a quarter since China announced the anti-dumping probe.
China is the top market for Australian wine exports and is also Australia's largest trading partner, with two-way trade worth A$235 billion (S$235 billion) last year.
The announcement comes less than two weeks after China, the biggest international buyer of Australian wine, said it had started an anti-dumping probe into the same product.
The latest investigation is the latest blow to the Australian industry, which has been hit by slower demand amid global Covid-19 lockdowns, drought-affected vintages, as well as smoke taint and damage from the country's unprecedented bush fire season last summer.
Industry group Australian Grape & Wine said China had previously flagged the potential for an anti-subsidy investigation and the sector was well placed to respond. It would fully cooperate through the investigation process.
Ties between the two trading partners have increasingly frayed in recent years.
In addition to banning Huawei Technologies Co from participating in Australia's 5G network, Australia's push for an independent inquiry into the origins of the Covid-19 outbreak sparked a Chinese backlash.
China halted some beef imports earlier this year, with a fifth meatworks banned from shipping product there just last week.
It also put tariffs of more than 80 per cent on Australia's barley exports in May after the conclusion of earlier anti-dumping and anti-subsidy probes.
In addition, the Chinese ambassador to Canberra said in April that Chinese consumers might choose to boycott the nation's exports because of strained relations, a comment that was seen as a threat in Australia.
