Chinese wine importer Song Tian is aware of the value of a trade war firsthand.
The Tianjing-based businessman, who used to promote 20,000 bottles of Australian wine a 12 months to Chinese prospects, needed to stop importing from Australia altogether as the trade relationship between Beijing and Canberra soured.
In late 2020, China imposed so-called “anti-dumping” tariffs of as much as 218 per cent on Australian wine, killing a market price a billion {dollars} a 12 months.
“It was too high, many other importers stopped buying Australian wines too,” he instructed the ABC.
“And they turned too costly for Chinese customers.”
Mr Tian said the damaging tariffs forced many wine importers like him to look elsewhere for business, seeking alternative wine suppliers such as Chile and the US.
Economic damage goes both ways
Australian grape farmers and winemakers have also felt the pinch from the escalating trade tensions.
According to the data from Wine Australia, China was a $1.2 billion market for Australian wine in 2020.
However, the market worth fell to only $24.2 million in March this 12 months, plummeting 98 per cent from its peak.
Last year, the Australian government took the trade dispute with China to the World Trade Organisation (WTO) and an independent panel has been appointed to try to resolve the issue.
Lee McLean from Australian Grape and Wine, the peak body of the wine industry, told the ABC that the tariffs imposed by China on Australian wine effectively made the market “unviable”.
“This has created a really vital imbalance in provide and demand for each wine and wine grapes, resulting in sharp falls in grape costs in some components of the nation and an oversupply of wine on the market,” he stated.
Other commodities — including barley, beef, timber, cotton, lobsters and coal — were also hit by crushing tariffs or trade restrictions.
However, Beijing’s policy to hurt Australia backfired in areas that were reliant on imports from Down Under.
The unofficial ban on Australian coal exacerbated blackouts in 18 Chinese provinces last year due to a power crunch stemming from a coal shortage.
China later reportedly moved to release some Australian coal from bonded storage during the ban to ease the shortages.
Tim Harcourt is the chief economist from the Institute for Public Policy and Governance at UTS and the former chief economist at Austrade.
He instructed the ABC the trade war was hurting each side, and small to medium enterprise house owners and customers have been bearing the brunt.
“I feel it has actually damage China,” Professor Harcourt said.
“The common Chinese enterprise house owners and customers have a great view of Australian high quality and Australia’s skilled popularity. I feel they’ve been fairly damage by the trade spat.
“And for local Australian exporters, I think the larger companies can deal with it, but for small-medium enterprises, there are 10,000 of them, they have survived but it has been pretty hard.”
Why did China put tariffs on Australia?
Under the former Coalition government — which banned Chinese tech large Huawei from the 5G cell rollout, pressed onerous on China’s human proper abuse in Xinjiang and Hong Kong, and referred to as for an unbiased inquiry into the origins of COVID-19 — the bilateral relationship was thrown right into a deep freeze.
China minimize off contact with Australian ministers and slapped tariffs and restrictions on round $20 billion price of Australian exports.
The Chinese government additionally took purpose at the worldwide training sector final 12 months, advising Chinese college students to not research at an Australian college throughout the trade row.
Kirk Yan runs an training company in each China and Australia, principally recruiting Chinese college students for Australian universities.
He instructed the ABC he misplaced purchasers as a result of of the trade spat and damaging media protection of the political tensions in each nations.
“But they missed out on a really good study destination, and they would have to pay more tuition fees and expenses.”
International training is one of Australia’s largest exports and China is the high supply nation for college kids.
But many Chinese college students have been choosing different nations as a substitute of Australia throughout the pandemic, which was additionally on account of Australia’s harsh border restrictions.
Veteran Chinese Australian businessman Richard Yuan is one other who has grow to be collateral injury of the trade war.
He stated his immigration enterprise, which has helped many prosperous Chinese to put money into and to migrate to Australia, was down as much as 90 per cent impacted by the trade spat and the COVID-19 pandemic.
‘Cautiously optimistic’ about a brand new government
The end of 9 years of Coalition rule has sparked new hope for a relationship reset, as Chinese Premier Li Keqiang despatched a congratulatory message to new Prime Minister Anthony Albanese, breaking a two-and-a-half-year diplomatic freeze.
Premier Li stated final week that “the Chinese side is ready to work with the Australian side to review the past, look into the future”.
He additionally referenced in his message that diplomatic ties with Australia have been established throughout the Seventies when former Labor prime minister Gough Whitlam was in energy.
The gesture has been welcomed by some export industries.
“We hope that it signals a willingness to engage in dialogue between our two countries at the political level,” Mr McLean from Australian Grape and Wine stated.
Mr McLean stated though he doesn’t anticipate an instantaneous re-opening of the Chinese market he hopes this could be a primary step for a political reset.
Patrick Hutchinson, CEO of the Australian Meat Industry Council, instructed the ABC that any alternatives to reset the bilateral relationship and reinstate a dialogue with China are welcomed.
“As always, we respect the sovereignty of China to apply individual sanctions if they feel these are necessary,” Mr Hutchinson stated.
For Chinese enterprise house owners like Mr Tian and Mr Yan, the current change of the Australian government is a “positive news” however each stated they continue to be “cautiously optimistic”.
“We had a pretty good relationship with Australia when Kevin Rudd was the prime minister… however, it is still too early for us to tell whether the Labor Party will have an effect on us or not,” Mr Tian stated.
Mr Yuan stated the optimistic notion of the new government has already translated right into a spike in enterprise enquiries in the previous week.
“The current trade relationship with China may be at a historical low point, except iron ore, the newly elected Labor government does provide some real hope,” he stated.
Treasurer Jim Chalmers beforehand instructed the ABC that it might be “a great start” for China to carry the present tariffs and sanctions as they’re “damaging” Australia’s economic system.
How to restore trade relations?
Over the previous few years, Australian export industries have been making efforts to diversify to minimise provide chain disruptions and offset the shortfall from China.
While some sectors like coal and barley held up comparatively effectively, due to a decide up in different markets, others like lobsters and wine have been much less resilient to the financial coercion from Beijing.
“This will require a sustained effort to promote our wines and communicate our story in key markets, both traditional and emerging, and hard work to break down market access barriers in collaboration with the Australian government.”
Professor Harcourt stated, though market diversification was more practical than he anticipated in the brief time period, it might be strategic to enhance the relationship with China in the long run.
“It is always important to have a diversification of trading partners, but China has to be part of Australia’s story going into the future.”
Mr Harcourt stated “the big opportunity for China and Australia is climate innovation”, given Australia’s coverage shift in local weather change and renewables and China’s ambition on lowering carbon emissions.
Prime Minister Anthony Albanese stated he needed to transition Australia right into a “renewable energy superpower” and the new government has dedicated to internet zero emissions by 2050 and a 2030 emission discount goal of 43 per cent.
Professor Harcourt additionally identified that it’s a delicate job for the Albanese Government to interact with China with respect whereas additionally defending nationwide sovereignty and democratic values.
“One thing that is positive is that Albanese won’t use a megaphone every Tuesday, using harsh rhetoric against China that was done by Scott Morrison and Peter Dutton,” he stated.
“It wasn’t very effective. It didn’t help the relationship with China and for many Chinese Australians.
“I think having our first foreign minister of partially Chinese descent, Penny Wong, is also an asset because it just shows the modern face of Australia, and I think China will recognise that.”
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