China’s trade intimidation risks economic self-harm

Brewers of world-renowned Tsingtao beer, based in the Chinese port city of Qingdao, get their malting barley from Australia, 8000km away. They could buy the annual 200,000 tonnes of grain from Canada, Ukraine or even locally, but there’s a simple reason they choose ours. “It’s the best quality,” a Tsingtao spokeswoman told The Weekly Times in November. Now our barley exporters have been threatened with an 80 per cent tariff from as early as next week, after an 18-month-long anti-dumping probe by China on the basis of alleged subsidies to Australian growers. That’s bad news for drinkers the world over, including China, and our farmers. Trade Minister Simon Birmingham points out producers here are among the most competitive in the world — they embrace technology, follow best-practice farming and get their grain to market at the lowest possible price. “There is no justification to find that Australia’s farmers and barley producers are subsidised or are dumping their product in such ways,” Senator Birmingham said.

We all know what’s going on here. Beijing’s top envoy to Canberra, Cheng Jingye, provided a brutal warm-up a fortnight ago. He warned Australian exports to China, such as wine, beef, tourism and education, could suffer a consumer boycott after Scott Morrison led calls for an independent inquiry into the origins of COVID-19. Still have doubts? On Monday, Canberra was informed China had suspended the import licences of four Australian beef producers, supposedly over labelling and health certificate requirements. The Trade Minister insists the ban related to “minor technical errors”. “Australia is not in any sort of war,” he said on Tuesday. That’s prudent, the calm, diplomatic language that defuses trouble and shows respect. He seeks to preserve the links between companies here and the partners they work with to get beef on the tables of a wealthy and discerning Chinese middle class.

Such crude boycott bullying is self-defeating for China on many levels, leading to a loss of prestige, suspicion about its motives and reliability, the disruption of supply chains, consumer resentment and estrangement from the fellowship of nations. As well, it makes no sense for a regime that claims the wellbeing of its people is paramount to abandon a united mission to find the source of the virus. So far, this “faceless and flagless enemy”, as Josh Frydenberg put it, has led to almost 290,000 deaths. Wisely, although risking appearing weak in the face of Beijing’s tantrum, Canberra wants to put trade and corona-verite on separate tracks. China cannot want to cruel the iron ore supply its steel mills crave or the coal and gas that fire up factories and heat homes. A deep stoush makes no sense, least of all between nations that have signed a free-trade deal.

Yet these are dark days for open trade and co-operation, with rising protectionism across the globe. Pundits are claiming globalisation has had its day, as nations look to secure with taxpayers’ funds key industries and energy supplies under the banner of sovereignty. We should be wary of drinking the protectionist Kool-Aid ourselves. Last month the Productivity Commission said while our overall level of industry assistance was falling, the drought led to more domestic support for farmers. As well, it noted Australia was one of the most prolific users of anti-dumping measures. The EU has joined the US, Canada and Australia in implementing anti-dumping measures on Chinese aluminium and steel. The roots of Beijing’s serial grievances can be found in such moves, which are legal under World Trade Organisation rules. Yet, as it is showing now, China bends, stretches, ignores and cherry-picks the rule book at whim, using its economic might to bluster, bully and badger its way through global commerce.

In whatever form it takes, protection is not a winning strategy for us. With a mid-sized population and a continent to develop, we rely on foreign capital. We sell bulk commodities, safe food, and unique travel and learning experiences, and use our brainpower, to pay our way and, hopefully, lift our living standards. More than one-fifth of all the goods and services we produce here is exported — no small beer for a nation committed in principle and action to an open, free and fair global trading system. We must hold our nerve in the face of these and other unseemly provocations under the shadow of COVID-19 and its human and economic miseries. If there is gain in the pandemic pain, it comes with a warning and a promise. The pandemic is teaching us that we need to diversify our markets, hold fast to our values and always keep faith in our world-beating producers and workers.