Our great brawl with China risks trade war
Beijing has accused Australia of launching an inquiry into the COVID-19 pandemic for political reasons.
Beijing has accused Australia of launching an inquiry into the COVID-19 pandemic for political reasons, declaring that “mutual respect and equality” must form the basis of bilateral relations amid industry fears an escalating trade clash could damage the $153bn export market to China.
Threats from China to impose tariffs on Australian barley exports and the suspension of meat exporters have also fuelled speculation Beijing is preparing a series of “retaliatory measures” to increase economic pressure on the Morrison government.
China’s Foreign Ministry on Tuesday night claimed the crackdown on four abattoirs in Queensland and NSW was not linked to the communist nation’s fury with Canberra even as it escalated its attack on Scott Morrison’s calls for a global investigation into the origins of the coronavirus pandemic.
“As to the Australian-launched inquiry into the virus, as is known by all, the origin of the virus requires the assessment of specialists and scientists,” Foreign Ministry spokesman Zhao Lijian said.
“Using the virus for political manoeuvre will only disrupt the epidemic co-operation. This will only be an unpopular move. China always believes that mutual respect and equality should be the basis for the development of bilateral relations.”
The Kilcoy Global Foods plant in Winya, Beef City in Toowoomba, the Dinmore meatworks in Brisbane and the Northern Co-operative Meat Company at Casino in NSW were suspended by Chinese authorities on Monday night without prior notice to Australia of the action.
Beef City and Dinmore are both owned by Brazilian company JBS and Kilcoy is a subsidiary of the Chinese firm New Hope Investment Fund. The four plants have not been officially delisted nor lost their licences in China.
Australian Meat Industry Council chief executive Patrick Hutchinson said the agency was working through labelling issues with Chinese and Australian authorities. “While not desirable, we have dealt with issues of this nature before and are working closely with the commonwealth,” he said. “This is a trade and market access issue that is being led by the commonwealth.”
The Australian can reveal that several industries are scrambling to protect their slice of the nation’s export market to China and are urging the Morrison government to consider its rhetoric towards Beijing. China is to decide by next week whether to impose massive tariffs of up to 80 per cent on Australian barley exports.
Minerals Council of Australia chief executive Tania Constable, who met China’s ambassador Cheng Jingye in Canberra last week, said Australian minerals and metals had “helped build cities and power growth in China for decades”.
The beef, grain, wine, dairy and seafood sectors are bracing for further action from China as experts warn of a looming “trade war” with Beijing. The Chinese-government-owned Global Times, a mouthpiece for the communist regime, said the threat to slap tariffs on Australian barley exports, which peaked at almost $1.5bn in 2017, could be followed by additional “retaliatory measures”. It described the relationship with Australia as moving towards its “lowest point in decades”.
The Australian understands the Morrison government is closely watching further moves by China against Australian products, with no expectations of restrictions being placed on the lucrative resources export market.
However, there are concerns China may pull other economic levers, including stalling of Australian products, as part of its efforts to exert pressure on the Morrison government.
Trade Minister Simon Birmingham, who was alerted late on Monday about Beijing’s decision to suspend the four meatworks facilities, rejected fears of a trade war but acknowledged the government was concerned the suspensions were based on “highly technical issues” related to labelling and health certificates.
“Australia is not in any sort of war. Our intentions to work as cooperatively as we can with our partners and across the world,” Senator Birmingham said.
In his remarks on Tuesday, Mr Zhao referenced comments made by China’s ambassador to Australia last month threatening boycotts of Australian products, including beef and wine.
“It expresses the concerns of Chinese people about the statement on the Australian side. I don’t see any problem with that,” he said.
Perth USAsia Centre research director Jeffrey Wilson said he believed China and Australia were now engaged in a “trade war” and that the suspension of imports from the four meat facilities would disrupt about a third of Australia’s $3bn annual beef exports to China.
“This is unquestionably political retribution,” Dr Wilson said. “This is not about technical issues and arguments over trade policy. This is about diplomatic signalling and making a point. Australia now finds itself in a trade war.”
Dr Wilson said he expected further trade sanctions as China pressed its political point against Australia. “Traditionally you would’ve expected sanctions on tourists and students, because that is something the Chinese government can manage through exit visas,” he said. “But with the coronavirus, there are no tourists or students. So we are seeing agricultural sectors being hit.”
West Australian Premier Mark McGowan said that, in difficult economic times, “we need to keep our trading relationship open and friendly” because up to 300,000 West Australian jobs depended on it. “We will keep a strong, friendly relationship with all our trading partners and ensure our relationship comes out of it well,” he said.
Ms Constable said that, post-COVID-19, world demand for Australian resources would “grow in line with the expanding needs” of highly populated nations. “Australia’s minerals industry and our reputation as a long-term reliable supplier of high-quality commodities has underpinned our nation’s longstanding and enduring economic, trade and commercial relationship with China,” she said.
Opposition veteran affairs spokesman Shayne Neumann, whose Queensland seat of Blair includes two of the suspended abattoirs (Kilcoy and Dinmore), said the government’s handling of the China relationship was now hurting workers in the regions.
“This is very troubling for my electorate and it will have a big impact on regional Queensland,” Mr Neumann said. “The government should do better in managing the relationship with China.”
Australian Grape & Wine chief executive Tony Battaglene said the wine industry feared it could be next. “Of course we’re nervous,” Mr Battaglene said. “Every time there is a diplomatic spat we worry about borders being closed and the possible impact that could have on our exports.”
Additional reporting: Richard Ferguson, Ben Packham
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