Coronavirus: China ‘punishing us to warn the world’

Australia is being used as an ­example by China to warn the rest of the world against crossing Beijing.

Lowy Institute fellow Richard McGregor says China’s sudden black-listing of Australian meat exports could be followed by wine and dairy bans. Picture: Kym Smith

Australia is being used as an ­example by China to warn the rest of the world against crossing Beijing, amid fears the multilateral trading system is breaking down.

Lowy Institute fellow Richard McGregor told The Australian China’s sudden black-listing of Australian meat exports could be followed by wine and dairy bans as Beijing seeks to penalise the Morrison government for speaking out in favour of an inquiry into the ­origins of the coronavirus.

“The meat decision is a straight-out shot across the bow to remind us of the damage they can do to us,” he said.

“They want to make sure governments which cross them politically understand there is a cost, and that the underlying populations also understand it.”

S&P chief economist Shaun Roache said it was in Australia’s interest for the World Trade Organisation to be reformed, as large nations were increasingly using trade as a political weapon.

“It isn’t only China,” he said. “We saw the US do it with Mexico, the EU with Brazil. It’s unfortu­nately becoming a popular tool. The WTO should be top of the list of institutions that need reform; it’s not fit for purpose.”

The Productivity Commission last month urged the government to appoint judges to the WTO.

“Even before the outbreak of COVID-19, the era of the world’s rules-based trading system that led to open, prosperous global economies since the end of World War II had stalled,” chairman ­Michael Brennan said.

“This is bad for business and bad for jobs and income.”

US Studies Centre trade analyst Stephen Kirchner said China’s threat of an 80 per cent tariff on barley probably wasn’t motivated by the government’s push for a coronavirus inquiry but rather by what China believes was excessive use of anti-dumping rules to keep out Chinese steel.

“They haven’t made explicit the connection with steel, but implicitly yes,” he said. “Even if we hadn’t been pushing for the inquiry, and things were relatively smooth at the diplomatic level, I think we would have seen the same decision on barley.”

China’s threat to impose an 80 per cent tariff on barley this week has threatened up to $1.5bn of annual exports, adding to the debate about the economy’s dependence on China in the wake of the coronavirus crisis.

Mr McGregor said Australia needed to be realistic.

“China could diversify away from us first,” he said.