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China V Australia: what will happen next?

China could hurt more Australian exporters by launching investigations under international trade law, experts warn. Tensions have continued to flare between Australia and its biggest trading partner after Australia called for an independent inquiry into COVID-19.The move has prompted backlash from Beijing, which last month launched an investigation into Australian wine imports.Relations were further frayed…

China could hurt more Australian exporters by launching investigations under international trade law, experts warn.

Tensions have continued to flare between Australia and its biggest trading partner after Australia called for an independent inquiry into COVID-19.

The move has prompted backlash from Beijing, which last month launched an investigation into Australian wine imports.

Relations were further frayed this week when two Australian journalists fled China after state police knocked on ABC reporter Bill Birtles’ door at midnight to inform him he was under investigation.

International trade expert Dr Weihuan Zhou said if Australia’s relationship with China improved, it may drop the wine anti-dumping investigation.

However if it got worse, the Chinese government could impose a duty of 200 per cent – which would raise the cost of wine and eradicate Australian winemakers competitive advantage.

“China is basically trying to do what is permitted under international trade law,” Dr Zhou said.

“Both countries are doing what is allowed.

“But obviously there is a political element.”

Dr Zhou said China could continue to launch anti-dumping investigations against Australia under World Trade Organisation ruling, which would safeguard its reputation.

He also warned strategy would underpin China’s decision to select an industry or a product, which would have a “significant or meaningful impact” on Australian businesses.

But only have a “moderate impact” on Chinese businesses and consumers.

However, Dr Zhou doubted threats of Chinese tourists and students boycotting Australia would come to fruition.

“China may use national security as an excuse to do anything,” he said.

“But even in the US China trade war, China hasn’t done so yet.

“So I wouldn‘t think the scale was anywhere near.”

Australian wine exporters were the latest to feel the wrath of China, after tariffs were slapped on barley and beef exports were suspended.

Lowy Institute senior fellow Richard McGregor warned the relationship between China and Australia wasn’t going to improve quickly.

“The trade tensions are political tensions played out through the trade,” he said.

He said China’s investigation into Australian wine imports, and Australia’s move to tear up deals between foreign governments and state and local governments could prompt further trade measures but it was “unpredictable”.

“A lot of what Australia sells to China is replaceable and on current trends they’re going to try and replace it,” he said.

“On iron ore, nothing will change quickly, coal is much more difficult.

“Leaving side bulk commodities, for trade with China to grow … you would probably want Chinese investment here.”

But he warned that Chinese investors were not as likely to come to Australia now because there was a very strong signal from their own government that at any time trade could be interrupted because of political issues.

“There’s going to be a slow unwinding of a growth in trade across a manner of things like wine and dairy and the like,” he said.

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