China-Australia trade: Aussie exporters wait for China’s next move

China’s latest trade blow against the $800 million cotton industry has Australian agriculture wondering: who’s next?

AUSTRALIAN agriculture is keeping a close eye on China’s next trade move, as exporters ask one question: who’s next in the firing line?

Concerns remain that China could slap interim tariffs on Australian wine, while horticulture is watching carefully as the season for summer fruits and table grapes approaches.

It comes after cotton became the latest victim of the souring Australia-China diplomatic relationship, with Cotton Australia confirming Chinese spinning mills have been verbally told not to buy Australian cotton.

“We’ve seen it with barley, then beef, wine, now cotton – it’s all a politically incentivised move against Australia on the part of the Chinese Government,” one China source told The Weekly Times.

“This is a signal to the Australian Government not to be too hard on China on a number of issues – the South China Sea, the origins of the pandemic.”

The unofficial edict on cotton, about 65 per cent of which usually goes to China, applies to all Australian cotton shippers – including the 51 per cent Chinese-owned Cubbie Station, the Chinese state-owned enterprise CNCGC Australian, and the international arm of China’s largest food and agriculture company, COFCO Corporation.

Department of Agriculture figures show ag exports to China between January and August this year are down more than $1 billion, at $8.1 billion compared with $9.2 billion for the same period last year.

Thomas Elder Markets analyst Andrew Whitelaw said it was unsurprising China would target cotton if it wanted to make a stand, given it already had enough stockpiled to meet its coming year’s consumption.

“Countries aren’t going to ban products that hurt themselves,” he said. 

“When you look at the numbers you can see the logic behind choosing cotton.”

Mr Whitelaw said dairy was also at slight risk, though demand remained strong, as were timber exports.

China has already knocked Australian barley out of the market by applying 80 per cent tariffs, blocked five beef exporters, and launched anti-dumping investigations on wine.

The 60-day deadline for applying an interim tariff on wine while the investigation is underway has passed, however China still has until November 16 to impose one if it wishes.

The horticulture industry is also watching, with China a significant market for summer fruits, grapes and citrus.

“Perishability is the issue – with grains you can send it to another market, but fruit you can’t mess around to work out which market you’re going to send it to,” a source said.

National Farmers’ Federation president Fiona Simson said the current situation again highlighted the need for diverse markets, particularly for those – such as cotton, seafood and wool – that may be overexposed to China’s whims.

“Obviously people are nervous and starting to jump at shadows a bit but at the end of the day, China is its own country … and Australia needs to preserve its interests and do what it needs to do as well,” Ms Simson said.

“I really think this is about Australia – what we do and what we produce – rather than trying to point fingers or grandstand or play games we can’t really play.”

Ms Simson urged farmers to keep exploring their market options, while calling on the Federal Government to keep working to mend the relationship.