The faceoff between Australia and China is escalating. The two countries have been caught up in a diplomatic dog fight that escalated from Huawei ban to COVID-19 utterances, and it is now ripping their bilateral ties apart.
In early October, China had announced the ban on Australian thermal and cooking coal imports. The move though subtly, was a significant add-on to events that have followed their soured relationship, which consequently, was aggravated by the outbreak of coronavirus.
In February, Australia Dumping Commission was weighing in on a possible continuation of dumping duties on Chinese aluminum extrusions. The Commission started an inquiry into the sales of aluminum micro-extensions, which are used for domestic window flyscreens and television aerials, made by Chinese companies Guandong Jiangshen Aluminum and Guandong Zhongya Aluminum.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
By the end of February, Australia concluded that it would continue to impose anti-dumping duties on Chinese deep drawn stainless steel sinks. The decision added further strain on the already fragile relationship between the two countries.
However, Australia and China were still reeling on relationship-amendment hope until April, when the issue of COVID-19 came into their squabble.
In April, when Australia backed the United States’ call to investigate the source of coronavirus, it became a dagger driven deep into the wound that China was already licking. The south Asian giant counted it among the many sins Australia has committed against Beijing, which it was contemplating whether to forgive or not. Among them, Australia’s swift ban on Huawei which was seen as a frontal attack on Beijing, and has set the two countries on the path of rivalry that has kept taking a new turn since then.
As the Guardian puts it; china sees Australia as frontrunning – yet again in Beijing’s eyes – on an issue deliberately constructed to isolate, condemn and humiliate China.
“The Chinese public is frustrated, dismayed and disappointed with what you are doing now… if the mood is going from bad to worse, people would think why should we go to such a country why it’s not friendly to China.
“The tourists may have second thoughts. Maybe the parents of the students would also think whether this place, which they find is not so friendly, even hostile, is the best place to send their kids to. And also, maybe the ordinary people will think why they should drink Australian wine or eat Australian beef,” China’s Ambassador to Australia said in May, signaling that Beijing intends to take the fight further over the coronavirus comment.
To Australia, Chinese response appears a dramatic overreaction to an entirely legitimate international concern to understand the origins of COVID-19 outbreak. The same logic was applied to the Huawei ban, which was done in the interest of national security that China is not ready to do anything about.
Spicing the inferno with embers was Yang Hengjun, Australian pro-democracy writer who has been incarcerated by China. Then there is the dispute over the South China Sea, continuing allegations of espionage; all came in bulk and spilled over into economics ring fight that no side is willing yet to throw in the towel.
China has upper hand, with Australia’s economic dependence on Beijing, it moved to exert “economic coercion”, a move Australia quickly called out.
“We reject any suggestion that economic coercion is an appropriate response to a call for such an assessment, when what we need is global cooperation,” Australian foreign minister, Marise Payne said.
China and Australia have the largest two-way trade partnership in goods and services, representing more than a quarter of all international trade. As of 2018-19, the two-way trade has reached $235 billion, 20% up year on year to record the highest amount ever.
The trade was notably boosted by goods from the food sector. Australia exports foods such as beef, seafood and diary, with a $12 billion value. But it is about to go down the drainage of the lingering dispute.
China is expected to ban Australian wheat on Friday, a $394 million trade deal. But it is just among other Australian goods being added to the list of new blocks on Australian products, according to SCMP.
The report said from Friday, barley, sugar, red wine, timber, coal, lobster, copper ore and copper concentrates from Australia, are expected to be barred from China even if the goods have been paid for and have arrived at the ports.
“Chinese importers have been told to obey these rules strictly and suspend all orders for commercial reasons,” a trade source in China who is familiar with the matter said. “Shipments arriving at the port before Friday will be released, but those arriving after will stay at port. It does not matter if it is already in the bonded area.”
China is expected to up its food importation, especially wheat to 6 million tonnes, an addition of 4 million tonnes from the previous year, as it “looks to meet internal demands and ensure stable domestic reserves amid a backdrop of uncertain market factors like food supply scare and trade tensions,” but Australia is not in the import plan, as China has begun to look elsewhere for the import of goods and services it has been importing from Australia.
There have also been reports of stockpiling of timber, lobster and other goods, much more than needed by China; a development analysts see as a warning to Australia that the worst is yet to come.
As more Australian ships get impounded in China, it confirms the suspicion that a full-scale trade war is looming between the two countries, and Australia will suffer its consequences.
“It’s been very tough for Australia. We have reached out continuously over a number of years to Chinese ministers and senior leadership and they’ve shunned us for various reasons. They’ve chosen to try and bully us at different times,” said Joe Hockey, Australia’s former treasurer.
Australia had earlier in the week, taken the matter to the World Trade Organization (WTO), where its officials criticized China’s investigation into whether Australia was dumping barley on the market. The officials called the probe “flawed” and claimed it has led to miscalculation of the duties charged.
Australia said the investigation had been “improperly initiated” and the products involved were not properly involved. Moreover, they claimed that Chinese authorities did not acknowledge receipt of information supplied by Australian producers, nor did it carry out verification visits, according to SCMP.
China’s WTO representative’s response to the claims is that Australia’s concerns had been noted. The complaint was continuation of the pursuit Australia made in early May in the WTO, which includes threat to sue China, though it has yet to make the move.
Reeling on the mercy of the mightier hand of Beijing, some analysts believe that Australia may use one area it has an edge over China – international education.
Australia has the largest proportion of international students in higher education. Almost a third of all higher education students in the country are international students. In the number, Chinese students make up the biggest share of the international students, with over 260,000 students, according to data from Statista.
A fight-back from this terrain will mean expelling over 260,000 Chinese students in Australia, but yet, it will do more harm than good.
In the wake of the tension between the two countries, China had sent warning to its students to rethink Australia. This also came on the heels of warning to Chinese tourists to avoid Australia.
China appears to have made advance preparation for the confrontation, leaving Australia waiting in a state of inaction.
A trade law professor at the Chinese University of Hong Kong said there is only one way to put an end to it.
“Australia seems set to pursue this – they need to tame China’s use of trade remedy investigations. Experience shows that waiting and hoping for a change of behavior does not work. Action speaks louder than words,” he said.