China-Australia relations: looming ban on Australian goods clouds Shanghai import expo

Amanda Lee
·6-min read

China’s informal ban on at least seven Australian products, set to take effect on Friday, is casting a pall over an import expo in Shanghai where the central government is trying to project an image of promoting free trade and goodwill.

While Beijing has yet to formally confirm that imports of Australian wine, copper, barley, coal, sugar, timber and lobster will be subject to increased restrictions from Friday, the state-run Global Times acknowledged the “import suspension” in an article on Wednesday.

As a result, concerns are mounting among Chinese importers of Australian wine and other farm products that their business will be upended by growing tensions between Beijing and Canberra, according to interviews with traders at the China International Import Expo, where Australian brands are well represented.

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At least three Australian wine importers at the venue said they expected their business to be badly hit after China – the top export market for Australian wine – started an anti-dumping investigation into Australian wine in August. The South China Morning Post reported this week that China could impose an anti-dumping duty of more than 200 per cent on Australian wine as soon as next week.

What has happened over the last seven months between China and Australia?

Some wine importers said that they have had to halt new orders and will rely on existing inventories already in Chinese warehouses.

Clark Wang, CEO of China Vintage, which distributes Australian wine such as Tempus Two, said that Chinese importers are facing a dilemma on whether to begin transitioning to selling wine from other countries, as doing so could mean that their investments and efforts in marketing Australian brands will have been wasted.

“Some Australian wine importers or distributors are likely to face disruptions in supplies or inventory problems,” Wang said. “This is a big hit for Australian wine in China. I wouldn’t say it is lethal, but it’s shaking the foundation.

“If there are no improvements in the relations between China and Australia in six months, Australia’s market share in China would take a steep dive, and it would be difficult to recover in the next two years.”

The impact will be definite in the short term. We still have enough inventory, but I really can’t say what’s going to happen after that

Deng, Chinese wine importer

As a merchant who has been distributing Australian wine for years, Wang said that importers are likely to look for alternatives, such as wine from France, as “we don’t know what the outlook will be”.

Another Chinese wine importer who distributes Vigena Wines from South Australia said he expected business to suffer.

“The impact will be definite in the short term,” the manager said, giving only his surname as Deng. “We still have enough inventory, but I really can’t say what’s going to happen after that.”

Verbal instructions by Chinese authorities, to effectively impose a trade ban on select Australian goods, are raising fresh concerns about Beijing’s trade regime transparency and true intentions. In the wine trade, for instance, importers said China has also introduced administrative measures to delay shipments of Australian wine, such as by prohibiting certain wine from being offloaded at a particular port or by halting the imports at customs.

The Post reported on Thursday that importers in China were continuing to receive phone calls from custom clearance agents to cut orders of Australian products, due to a high risk they could suffer losses.

The escalation in tensions between China and Australia, which has shown no sign of abating after seven months, occurred after Canberra pushed for an international inquiry into the origins of the coronavirus in April.

Australia’s trade minister, Simon Birmingham, said official Chinese government statements had denied that any coordinated effort was being taken against Australia, and he hoped Beijing “is true to its word”.

“They deny any discriminatory actions that are being taken. But that doesn’t seem to be what industry is seeing and hearing at present,” Birmingham said, according to Reuters.

China’s restrictions on trade flows from Australia conflict with its official message. President Xi Jinping delivered a keynote speech by video at the event, saying that all countries should embrace “trust instead of suspicion, and join hands instead of exchanging fists”.

For those engaged in trade with Australia, however, the reality is hard to ignore. The Australian government did not send an official delegation to the Shanghai expo – its first absence since the trade event began in 2018 – disappointing the business community. Communist Party mouthpiece People’s Daily reported last month that there were more than 200 companies from Australia taking part in this year’s import expo. Figures from the Australian Trade and Investment Commission indicate that is the highest turnout from the country since the event began.

Even for businesses not being targeted now, there are mounting concerns that they could be next.

A China representative from an Australian dairy company at the expo said that even though milk powder had not been targeted in China’s trade measures against Australia, she was becoming wary amid the escalating tensions between the two countries.

We understand there is political tension … everyone is praying and hoping that the relationship stays strong

Robert Mackenzie

“Just look at beef and wine – they are not going to do well here,” said the representative, who declined to be identified. “We are not affected now, but it can’t be good for business sentiment. I am concerned about it, personally.”

In Australia, Robert Mackenzie, the owner of Australian cattle producer and beef exporter Macka’s Beef’s, said he has not yet seen any halts to his beef shipments. In fact, since most of China’s coronavirus lockdowns were lifted in May, Chinese inquiries for Macka’s Beef’s products have increased, he said, adding that they had doubled in the past six weeks.

Mackenzie has been busy diversifying sales to other countries, including the Philippines and Singapore, but he said he remains committed to China.

“We understand there is political tension … everyone is praying and hoping that the relationship stays strong,” Mackenzie said.

And despite that tension, the Shanghai expo – which started on Thursday and ends on Tuesday – is still seen by many foreign businesses as an important gateway to tap into China’s strong economic rebound from the pandemic, even though the coronavirus has significantly reduced the number of attendees from abroad.

Sun Lixing, a researcher at Shanghai Academy of Social Sciences, said the import fair will play a significant role in reshaping the world’s economic order amid China and Asia’s rise.

“You have to admit that, as a vast market, China’s increasing consumer spending based on the huge population cannot be ignored by international companies,” he said.

Additional reporting by Daniel Ren and Su-Lin Tan

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