(Staff article from the BLOOMBERG NEWS on 03 November 2020.)
Commodities traders in China won’t be
able to import products including coal, barley, copper ore and concentrate,
sugar, timber, wine and lobster, according to people familiar with the
situation. The government has ordered the halt to begin on Friday, one of the
people said, asking not to be identified as the information is sensitive.
The notice was verbally relayed to major traders in meetings in recent weeks, one of the people said. Iron ore, Australia’s biggest export to China, won’t be included in the halt, the people said. The order represents a dramatic deterioration in ties, which have been strained since Australia barred Huawei Technologies Co. from building its 5G network in 2018 on national security grounds.
Relations
have been in free fall since Prime Minister Scott Morrison’s government in
April called for an independent probe into the origins of the coronavirus. “China
seems determined to punish Australia and make it an example to other
countries,” said Richard McGregor, a senior fellow at Sydney-based think tank
the Lowy Institute. “They want to show there’s a cost for political
disagreements.”
China
has already barred meat imports from four Australian slaughterhouses, delayed
lobster shipments from clearing customs, slapped tariffs of more than 80% on
barley, and said it won’t allow timber from Queensland state because of pests.
Wine is also under an anti-dumping investigation while Chinese power stations
and steel mills have been told to stop using Australian coal. Cotton purchases
have also been suspended.
China’s
relevant departments conducted inspection and general quarantine measures on
certain Australian goods according to laws and regulations, Foreign Ministry
spokesman Wang Wenbin told a briefing Tuesday in Beijing. China hopes Australia
will do more so that bilateral relations can get back to normal soon, he said. China’s
customs authority and Ministry of Commerce didn’t respond to faxes seeking
comment.
At
least one customs clearance company started halting shipments across the seven
types of products on Tuesday, a person said. China will also ban shipments of
Australian wheat from a yet-to-be-disclosed date, according to the South China
Morning Post, which earlier reported the impending bans on other Australian
commodities.
Australia’s
government is working with domestic industry and making enquiries with the
Chinese authorities about the reports, according to an emailed statement from
Trade Minister Simon Birmingham.
“China
has consistently denied any targeting of Australia and spoken about its
commitment to trade rules,” the statement said. “In the spirit of their
statements, we urge relevant Chinese authorities to address concerns of sectors
like the seafood trade to ensure their goods can enter the Chinese market free
of disruptions.”
China
is Australia’s most important trading partner, with agricultural shipments
alone totaling about A$16 billion ($11.3 billion) in 2018-19. With Australia in
the midst of its first recession in almost 30 years, the widespread trade
measures from Beijing couldn’t come at a worse time for Morrison’s government.
Australia is the world’s most
China-dependent developed economy and finalized a comprehensive free-trade
agreement with Beijing in 2015, a year after President Xi Jinping made a state
visit. But the Huawei ban, and anti-foreign interference laws that Canberra
said were designed to reduce Beijing’s “meddling” in its internal affairs,
marked the end of such cordial ties.
Australia’s
former treasurer Joe Hockey, who helped oversee the trade deal, on Tuesday
accused Beijing of bullying and immature behavior. “The problem is China just
doesn’t want to talk,” Hockey, who until January served as Australia’s
ambassador to the U.S., said in a Bloomberg Television interview from
Washington. “Instead they just want to react aggressively and try to bully us.
And bullying never works with Australia.”
McGregor,
who said he doesn’t know the veracity or specific details of all the recent
trade reprisals, called Morrison’s demand for a coronavirus probe a miscalculation.
“Australia and China were always going to be edging toward separate paths,” he
said. “But the call for the inquiry quickly turned the relationship into a very
ugly divorce.”
‘Australia Will Pay’: China Threatens With Import Bans
China
has escalated the trade dispute with Australia in a searing new editorial that
accused Australia of “colluding” with Washington’s “schemes” against China. The
editorial, published yesterday by China Daily, accused Canberra of being a
“roughneck” in America’s “gang” for what it claimed were moves to contain China
economically and militarily.
“Canberra ... has undermined what were
previously sound and mutually beneficial ties by prejudicially fueling
anti-China sentiment at home, baselessly sanctioning Chinese companies and
aggressively sending warships to China's doorsteps,” the editorial stated. “Canberra
should realise it will get nothing from Washington in return for its collusion
in its schemes, while Australia will pay tremendously for its misjudgment.”
The
strongly-worded piece took aim at Australia’s relationship with the US, warning
Australia should “steer clear of Washington’s brinkmanship with China before it
is too late”.
“To
put it simply, if Canberra continues to go out of its way to be inimical to
China, its choosing sides will be a decision Australia will come to regret as
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.”
The
piece was published on the day that China reportedly moved to ban several new
imports from Australian industries and companies, including sugar, lobster,
copper, copper concentrates and some timber.
China
and Australia’s trade relationship has been steadily deteriorating since
Australia initiated the World Health Organisation (WHO) inquiry into the
origins of Covid-19, which was unanimously backed by every member state.
However,
the Communist Party State mouthpiece denied that the trade sanctions were
“economic coercion” or “retribution”, and said that they were “normal trade
investigations China is conducting”. Last week, Australian rock lobsters were
also delayed on a Chinese airport tarmac amid custom clearance delays.
But
China Daily said the “impatience” on Canberra’s part to clear the lobsters
through customs “betrayed … guilty conscience”, appearing to imply the
Australian product could be a source of Covid-19. “Imported seafood has been
confirmed as the source of a number of novel coronavirus outbreaks in the
country, which were fortunately quickly contained,” it stated.
Earlier this week, prominent Australian economist Tim Harcourt told Yahoo Finance that China’s trade blows were intended to send a political message. “They want to target things that won't really hurt them a lot, but make a point,” he said. “They really don't want to be seen as responsible for the pandemic. The best form of defence is attack.”
China is unlikely to significantly
intensify the bans, he added. “Ultimately this will really hurt them. If they
broke down trade with Australia, it would really hurt their recovery, the
middle class, and put them under a lot of political pressure. “We do need China
as a trading partner, but they need us – probably more.”
The latest escalation of the trade dispute comes as the world awaits the conclusion of the US Election, in which Joe Biden is looking increasingly likely to take the White House. During his time as US President, Donald Trump first imposed tariffs on Chinese goods on 22 January 2018, which triggered a tit-for-tat trade war for nearly two years.
