China’s crippling payback plan: are wool and dairy next on the hit list?

China has painted Australia as the aggressor as the trade war into Australian wine escalates but experts say its just “tit-for-tat”.

China has painted Australia as the aggressor as trade tensions escalate but one expert say its just “tit-for-tat”.

Beijing this week announced an anti-dumping investigation into Australian wine exports in a massive blow for the industry.

Chinese state-owned media outlet the Global Times this week alleged the politically hostile atmosphere was prompted by Australian politicians speaking out, which had “deliberately sabotaged bilateral relations” and created new friction points.

“What’s more, they do so without the necessary regard for their economy, which may suffer losses as a result of market panic,” it wrote.

But University of NSW international law expert, Dr Weihuan Zhou, said the investigation was not a further escalation of the diplomatic tensions since Australia called for an independent probe into the origin of COVID-19.

“It is more likely a typical tit-for-tat action in the narrow field of anti-dumping, as a response to Australia‘s longstanding practice of treating China as a non-market economy in a series of anti-dumping investigations in the past decade,” he said.

Dr Zhou said Australia has imposed 18 of 27 anti-dumping measures on China, compared to its two on Australia.

“China has been considerably less aggressive in the use of such measures,” he said.

“But given that China accounts for $1.1 billion in sales and is Australia’s largest export market for wine, this investigation will have significant impacts on Australian wine producers and exporters who may not find an alternative market of a comparable size.”

Federal Trade Minister Simon Birmingham said the investigation was “a very disappointing and perplexing development” from its largest wine importer.

Australia exports 37 per cent of its wine to China, an industry worth more than $1.07 billion.

But China’s anti-dumping investigation effectively accuses Australia of flooding China with cheap wine in an effort to skew the market.

ANU professor Dr Chunlai Chen said Chinese anti-dumping initiatives had a high success rate which was “bad news” for Australian winemakers.

He said if anti-dumping measures were put on Australian wine, it would push up the price and reduce its competitiveness.

This would provide an opportunity for France and Argentina to take over Australia’s market share.

“Australia’s main export is primary products,” Dr Chen said.

He also raised concerns about Australia’s wool and dairy products being next on Beijing’s hit list.

“I don’t think China will do this because they need the wool for its textile industry,” he said.

“But we will wait and see what happens.”

He said Australia should look to diversify its export markets and strengthen its relationships with Vietnam and India.

“If you too heavily rely on one single market you are vulnerable,” he said.

“Australia should be active in looking for other opportunities.”