China Threatens Australia’s Agricultural Industry
The Australian agricultural industry is being the target of trade tensions between Australia and China, with beef and barley producers taking the main hit. China, who is the world’s second largest economy is throwing their weight around to stop requests of an inquiry into the coronavirus that originated in Wuhan. China threatens to put a tariff of up to 80% on Australian barley as they demand Australia to give a response within ten days to dumping claims into the Chinese market.
Australia’s Prime Minister, Scott Morrison, claims that these allegations have been taking place for 18 months and did not draw a correlation between this and Australia's call for an independent inquiry into the Chinese-born coronavirus. Chinese beer manufacturers are reported to be concerned about the ‘barley ban’ that could limit their production. Interestingly, China imports the majority of its barley from Australia, while Australia exports more than half of its barley to China which is worth A$1.5-A$2 billion each year.
Recently, China has stopped importing from four of Australia’s largest abattoirs, three of which are in Queensland and one in New South Wales. This action is believed to be a retaliation to Australia asking for an enquiry into the coronavirus, that originated in the city of Wuhan. Beef exports to China surged in 2019 and are worth more than $3 billion. This comes after a growing middle class and pork availability being largely reduced due to the African Swine Fever rampaging through China, reducing stock levels. Additionally, this action has caused concerns within dairy producers who believe they may be the next in line to be faced with exporting tariffs. Fortunately, the national lobby Australian Dairy Farmers claimed that “it’s not a dairy issue”.
China is Australia’s largest trading partner with 2019 statistics showing that 38% of all exports went to this country. Australia’s strong relationship with China is therefore vital and it is critical that this friendship is regained to benefit the GDP. This is a small impact on China as there is nothing Australia produces that they cannot source from other countries.
Interestingly, Tim Hunt, Head of Research at Rabobank Australia and New Zealand reported that "regrettable as the trade clampdown has been, it can't come as a complete surprise to Australia or its agriculture industry." Mr Hunt went on to say that "China has a history of using agricultural trade as a political lever going back at least 10 years. It's used this lever with Australia itself in the past and its ambassador has warned Australia as long as a year ago that we were headed down this path." China is clearly sending this message that there is a cost to interfering with their internal affairs.
By Caroline Wong
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