China‘s arbitrary bans and tariffs on billions of dollars worth of Australian goods has not had the desired effect the authoritarian nation had hoped.
A new report has outlined that most exports hit by China trade sanctions have simply found their way into other markets across the Indo-Pacific.
The Communist Party targeted Australian barley, beef, coal, copper, cotton, seafood, sugar, timber and wine over the past year after Scott Morrison‘s government called for an independent international inquiry into Beijing’s bungled handling of the Covid pandemic – which first appeared in Wuhan at the end of 2019.
But Lowy Institute chief economist Roland Rajah said the ‘fairly overt attempt at economic coercion’ has been ‘quite limited thus far’.
Australia has looked to expand an increase into new markets doing deals with big buyers in India, Indonesia, South Korea, Japan and throughout Southeast Asia.
Beijing’s arbitrary bans and tariffs on billions of dollars worth of Australian goods has not had the desired effect the authoritarian nation had hoped. Pictured: Chinese President Xi Jinping (left), Australian Prime Minister Scott Morrison (right)
Shoppers wearing face masks line up to buy fresh beef from Australia at a supermarket on July 4, 2020 in Hainan Province of China
Hostilities between Australia and China have soared in recent years after a number of diplomatic spats (Penfolds wine is stacked on a shelf in China)
‘Looking at exports of barley, copper, cotton, seafood and timber, sales of these products to other markets rose sharply,’ he said in the report.
However, the 212 per cent tariffs imposed on Australian wine are still hurting and beef producers are also still struggling to make up for the losses from China’s premium market.
There was an immediate downside for Australian coal exports which fell $6billion after ships were blocked from docking in Chinese ports in October.
Despite the initial slump Australian coal exporters have been quite successful in diverting to other markets.
‘By January 2021, Australian coal exports to the rest of the world were running $9.5billion higher in annualised terms than before the ban,’ Rajah said.
‘Thus, whatever impact China’s ban on Australian coal might be having, it doesn’t seem to be enough to shift the overall picture a great deal once trade diversion is taken into account.’
The graph shows Australian coal exports sanctioned by China (red line) that have shifted to other markets (blue line)
The graph show barley, copper, cotton, seafood, and timber exports to China that have shifted to other markets
This graph shows barley, beef, coal, copper, cotton, seafood, sugar, timber, and wine products sanctioned by China and redirected to other markets
The Australian coal ban also saw about dozen Chinese cities turn dark in December with residents forced to ration their electricity use due to the politically-inflicted own-goal.
The report also points out that Australia’s overall trade with China has barely budged despite about $20billion worth of Australian goods having been affected.
‘At the headline level, the effect of China’s trade sanctions on Australia’s export numbers has been completely swamped by the booming iron ore trade – which China hasn’t been game enough to touch,’ Rajah said.
The developing country still desperately needs Australian iron ore for steel making and in the wake of the coronavirus crisis the price has skyrocketed from about $61 a tonne in May 2020 to $166 in April this year.
The Chinese government attacked Australia over war crimes allegations by posting this falsified image on Twitter
China’s 14 grievances with Australia
1. ‘Incessant wanton interference in China’s Xinjiang, Hong Kong and Taiwan affairs’
2. ‘Siding with the US’ anti-China campaign and spreading misinformation’
3. ‘Thinly veiled allegations against China on cyber attacks without any evidence’
4. ‘An unfriendly or antagonistic report on China by media’
5. Providing funding to ‘anti-China think tank for spreading untrue reports’
6. ‘Foreign interference legislation’
7. ‘Foreign investment decisions’
8. ‘Banning Huawei technologies and ZTE from the 5G network’
9. ‘Politicisation and stigmatisation of the normal exchanges and coorperation between China and Australia’
10. Making statements ‘on the South China Sea to the United Nations’
11. ‘Outrageous condemnation of the governing party of China by MPs and racist attacks against Chinese or Asian people’
12. ‘The early drawn search and reckless seizure of Chinese journalists’ homes and properties’
13. Calls for an independent inquiry into Covid-19
14. ‘Legislation to scrutinise agreements with a foreign government’
The price surge has meant Australia’s overall annual trade merchandise exports to China have only fallen two per cent from $145billion in 2019.
Australian Trade Minister Dan Tehan said on Wednesday he is determined to help ‘team Australia win in Asia’ as the country pivots to new markets and away from it’s largest trading partner.
He told reporters ‘we can’t sit on our hands’ as Chinese trade officials refuse to engage with efforts to end the hostilities.
Chinese ambassador Cheng Jingye defended the Communist Party’s stance yesterday when he presented a propaganda video in Canberra in an attempt to downplay the mass detention of Uighurs Muslims in Xinjiang Province.
He said ‘the difficulty we now have in the bilateral relationship’ is because of Australia.
Packs of beef imported from Australia are displayed for sale at supermarkets on June 17, 2015 in Beijing
Despite the initial slump Australian coal exporters have been quite successful in diverting to other markets
How China’s feud with Australia has escalated
2019: Australian intelligence services conclude that China was responsible for a cyber-attack on Australia’s parliament and three largest political parties in the run-up to a May election.
April 2020: Australian PM Scott Morrison begins canvassing his fellow world leaders for an inquiry into the origins of the coronavirus pandemic. Britain and France are initially reluctant but more than 100 countries eventually back an investigation.
April 15: Morrison is one of the few leaders to voice sympathy with Donald Trump’s criticisms of the World Health Organization, which the US president accuses of bias towards China.
April 21: China’s embassy accuses Australian foreign minister Peter Dutton of ‘ignorance and bigotry’ and ‘parroting what those Americans have asserted’ after he called for China to be more transparent about the outbreak.
April 23: Australia’s agriculture minister David Littleproud calls for G20 nations to campaign against the ‘wet markets’ which are common in China and linked to the earliest coronavirus cases.
April 26: Chinese ambassador Cheng Jingye hints at a boycott of Australian wine and beef and says tourists and students might avoid Australia ‘while it’s not so friendly to China’. Canberra dismisses the threat and warns Beijing against ‘economic coercion’.
May 11: China suspends beef imports from four of Australia’s largest meat processors. These account for more than a third of Australia’s $1.1billion beef exports to China.
May 18: The World Health Organization backs a partial investigation into the pandemic, but China says it is a ‘joke’ for Australia to claim credit. The same day, China imposes an 80 per cent tariff on Australian barley. Australia says it may challenge this at the WTO.
May 21: China announces new rules for iron ore imports which could allow Australian imports – usually worth $41billion per year – to be singled out for extra bureaucratic checks.
June 5: Beijing warns tourists against travelling to Australia, alleging racism and violence against the Chinese in connection with Covid-19.
June 9: China’s Ministry of Education warns students to think carefully about studying in Australia, similarly citing alleged racist incidents.
June 19: Australia says it is under cyber-attack from a foreign state which government sources say is believed to be China. The attack has been targeting industry, schools, hospitals and government officials, Morrison says.
July 9: Australia suspends extradition treaty with Hong Kong and offers to extend the visas of 10,000 Hong Kongers who are already in Australia over China’s national security law which effectively bans protest.
August 18: China launches 12-month anti-dumping investigation into wines imported from Australia in a major threat to the $6billion industry.
August 26: Prime Minster Scott Morrison announces he will legislate to stop states and territories signing deals with foreign powers that go against Australia’s foreign policy. Analysts said it is aimed at China.
October 13: Trade Minister Simon Birmingham says he’s investigating reports that Chinese customs officials have informally told state-owned steelmakers and power plants to stop Aussie coal, leaving it in ships off-shore.
November 2: Agriculture Minister David Littleproud reveals China is holding up Aussie lobster imports by checking them for minerals.
November 3: Barley, sugar, red wine, logs, coal, lobster and copper imports from Australia unofficially banned under a directive from the government, according to reports.
November 18: China releases bizarre dossier of 14 grievances with Australia.
November 27: Australian coal exports to China have dropped 96 per cent in the first three weeks of November as 82 ships laden with 8.8million tonnes of coal are left floating off Chinese ports where they have been denied entry.
November 28: Beijing imposed a 212 per cent tariff on Australia’s $1.2 billion wine exports, claiming they were being ‘dumped’ or sold at below-cost. The claim is denied by both Australia and Chinese importers.
November 30: Chinese foreign ministry spokesman Lijian Zhao posted a doctored image showing a grinning Australian soldier holding a knife to the throat of an Afghan child. The move outraged Australians.
December 12: Australian coal is added to a Chinese blacklist.
January 11, 2021: Australia blocks $300million construction deal that would have seen state-owned China State Construction Engineering Corporation takeover Probuild. The bid was blacked over national security concerns.
February 5, 2021: China confirms Melbourne journalist and single mother Cheng Lei has been formally arrested after being detained in August, 2020.
February 23, 2021: China accuses Australia of being in an ‘axis of white supremacy’ with the UK, USA, Canada and NZ in an editorial.
March 11, 2021: Australia is accused of genocide by a Communist Party newspaper editor.
March 15, 2021: Trade Minister Dan Tehan announced he wants the World Trade Organisation to help mediate discussions between the two countries over the trade dispute.