Nov 03: China's Government has raised the stakes in its economic campaign against Australia, with several importers receiving directives verbally to stop import shipments of Australian wine this week, writes Subhash Arora who feels that the move is political and meant to punish Australia for taking a stand against China as the source of Covid-19 and now joining the Quad exercise by the navies of US, Australia, Japan and India which is perceived as a threat to its wishful supremacy in the region
At least four wine importers have been reportedly advised by their local distributors to stop importing Australian wine, with Chinese Commerce officials in several cities holding off-the-record meetings to announce the new directive, with phones banned for communication.
Australian industry sources say they have been warned by importers that shipments of Australian wine will not clear customs after Friday 6 November. They have also been warned against flouting the ban by re-routing shipments through a third country. Custom authorities have been asked to be extra vigilant about the certificates of origin.
Several distributors told ABC that wine was not the only target, with shipments of Australian lobster, sugar, coal, timber, barley and copper ore also to be unofficially suspended unofficially from November 6, dealing a major blow to Australia's economy.
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Chinese authorities have rejected these claims, with representatives of a couple of major ports reporting they have not received any such notices. Officials at China's Commerce Ministry have also reportedly denied the existence of any new directives targeting Australia.
A few months ago, China had announced that it would investigate claims by a few local Chinese wine producers that Australia had sold wine below cost and subsidised its farmers. Under a Free Trade Agreement, the import duties had been waived off completely last year, resulting in a massive increase and record export to Australia.
This action will deal a big blow to Australia which has the largest export market in China. Last year, the exports were worth A$1.26 billion. Though Wine Australia had warned this year that the wine exports were expected to come down due to the political turmoil and even advised Oz producers to look for alternative markets in Asia, exports to China jumped in value by further 23 % despite Covid-19. There was some speculation that this was due to the expected sanctions soon.
One Hangzhou-based wine importer has reportedly told the ABC that he is shifting his imports to New Zealand, but a Shanghai-based importer said shipments of New Zealand wine were also in the firing line.
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China is threatening to also impose bans on up to A$6 billion of key Australian exports from Friday, 6 November, under a widely distributed notice sent to the country's food and wine distributors, raising fears of a second wave of economic coercion as the diplomatic relations between the two countries hit a new diplomatic low. The exporters of natural resources fear that they are being hit by a new wave of Chinese sanctions after Beijing banned Queensland timber imports and suspended trade with another Australian grain exporter. The Chinese Government has already targeted several segments of Australian industries with trade disruptions, including barley, cotton, coal, lobster and beef.
Anger and mistrust between the two countries has been fermenting for years after the Australian Security Intelligence Organisation (ASIO) warned of growing Chinese attempts to influence their decision-making in 2017 and donations from Chinese businessmen to local politicians came to light, straining relations between the two countries. Later PM Malcom Turnbull had announced laws designed to curb foreign interference to which China responded by freezing diplomatic visits.
In 2018, Australia became the first country to publicly ban the Chinese tech giant Huawei from participating in its 5G network, citing national security reasons. However, Australia's trade relationship with China continued to flourish. Chinese growing economy continued to depend on Australia’s natural resources and the iron ore, coal and liquefied natural gas continued to be imported by China. Chinese tourists and students visiting Australia contributed hugely along with export income continuing to contribute to the Australian economy.
Things have changed dramatically for the worse in 2020. Things are at their political lowest since diplomatic relations were established in 1972. The real trigger has been Australia demanding an investigation into China being the origin of Covid-19, which was first detected in Wuhan. Prime Minister Scott Morrison also reportedly suggested that the WHO needed tough, new weapons inspector powers.
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Imposing informal sanctions and creating trade barriers is a two-way street but China has been balking at other countries increasing tariffs or trying to ban imports from China-especially US, Canada and the UK. Most prominent has been the ban of 5G technology that has billions of dollars riding on it and these countries have banned Huawei-the world technology leader in 5G. Even India has insisted 5G technology be banned from China due to a national security risk but it has chosen not to face the issue directly but instead it requires that all countries sharing a boundary with India (including China) must pre-register their companies for any tenders for big purchases. The applications from China are apparently neither being approved nor rejected but kept in abeyance.
Subhash Arora
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