China’s bullying on wine, coal defies free trade pacts

Despite hints of a thaw in its dysfunctional trading relationship with Australia, China has resumed its cat-and-mouse game, targeting our $45bn-a-year wine industry. From midnight on Friday, China imposed duties ranging from 107.1 per cent to 212.1 per cent on Australian wine imports, using the spurious excuse that dumping by Australia was undermining China’s wine industry. That falsehood, Trade Minister Simon Birmingham said, would render some Australian wineries unviable. China’s sudden move, which Senator Birmingham found out about on a Chinese government website, is incompatible with China’s commitments to the China-Australia Free Trade Agreement, the World Trade Organisation and a rules-based trading system.

It comes as a flotilla of 82 ships carrying 88 tonnes of Australian coal worth $1.1bn languishes off Chinese ports. Australian coal exports to China plunged by 96 per cent in the first three weeks of November. The go-slow choreographed by Chinese authorities is based on the manifestly dishonest excuse of “environment checks”. Australian government ministers are being barred from speaking with their Chinese counterparts. As Senator Birmingham says, the cumulative impact of China’s trade sanctions against several Australian industries gives “rise to the perception these actions are being undertaken as a result or in response to some other factors”.

The Chinese Communist Party’s latest round of economic bullying, incongruously, comes after its positive response to Scott Morrison’s address on Monday to the Policy Exchange think tank in London. Beijing’s tightly controlled media described the speech as an “olive branch”. That reaction was more encouraging than anything Australia has heard for months from the CCP’s wolf-warrior spokesmen. China’s vitriol was fuelled by Australia’s lead role — ultimately supported by almost the entire world, including China itself, at the World Health Assembly — in pushing for an investigation into the source of the COVID-19 pandemic.

In his address, the Prime Minister emphasised that Australia wanted China to enjoy economic success. Australia had played an important role for many years in helping lift China and its people out of poverty. Any suggestion Australia wanted to contain or restrict China was false, Mr Morrison said. He called on China to begin talking to Australia “in a direct way” about the various geopolitical and trade tensions afflicting the relationship. Issues had been “clouded and distorted”, Mr Morrison said. Australia wanted “an open, transparent and mutually beneficial relationship with China as our largest trading partner, where there are strong people-to-people ties, complementary economies and a shared interest in regional development and wellbeing, especially in the emerging economies of Southeast Asia”. Australia’s pursuit of its interests were being “wrongly interpreted by some only through the lens of the strategic competition between China and the US”, he said.

On Tuesday, Beijing’s foreign ministry spokesman, Zhao Lijian, said China had “noticed Prime Minister Morrison’s positive comments on the global influence of China’s economic growth and China’s poverty alleviation efforts”. It remains to be seen what follows. China’s highhanded treatment of our wine and coal exports is an ominous sign. The effect of president-elect Joe Biden’s entry into the White House, after the upheavals caused by Donald Trump’s trade wars, also remains to be seen. Mr Biden, who as US vice-president met Xi Jinping eight times, holds out the prospect of better relations with Beijing but has said he will be no less tough than Mr Trump on China. The Morrison government’s hope, Paul Kelly writes in Inquirer, is that the Biden administration will give Australia more space to operate between the US and China,

Mr Xi also faces profound challenges in sustaining China’s economic growth, as Rowan Callick writes. The Chinese economy grew by 4.9 per cent in the last quarter, its overworked steel mills “sucking in vast shipments of iron ore from the Pilbara, so far unaffected by those bans on what Beijing views as more niche products”. At this stage its imports of Australian iron ore are up by 4.4 per cent this year. It is the lifeblood of the Chinese economy and at this stage it cannot secure adequate supplies elsewhere. The new 15-nation Regional Comprehensive Economic Partnership that includes China and Australia also may help press the reset button on our most important trading relationship. But there is no guarantee, as Senator Birmingham says, that Beijing is prepared to enter the spirit of the agreement.

Mr Morrison, as Kelly writes, would like to break the ice in a meeting with Mr Xi without, of course, accepting an Australian retreat from core policies as the price of dialogue. There is scope for Australia to recast its messaging to China short of any sellout of principle. What is less clear, however, given China’s antagonism over wine and coal, is whether it would be interested in responding.