China‘s arbitrary bans and tariffs on billions of dollars worth of Australian goods has not had the desired effect the authoritarian nation had hoped.
A new report has outlined that most exports hit by China trade sanctions have simply found their way into other markets across the Indo-Pacific.
The Communist Party targeted Australian barley, beef, coal, copper, cotton, seafood, sugar, timber and wine over the past year after Scott Morrison‘s government called for an independent international inquiry into Beijing’s bungled handling of the Covid pandemic – which first appeared in Wuhan at the end of 2019.
But Lowy Institute chief economist Roland Rajah said the ‘fairly overt attempt at economic coercion’ has been ‘quite limited thus far’.
Australia has looked to expand an increase into new markets doing deals with big buyers in India, Indonesia, South Korea, Japan and throughout Southeast Asia.
Beijing’s arbitrary bans and tariffs on billions of dollars worth of Australian goods has not had the desired effect the authoritarian nation had hoped. Pictured: Chinese President Xi Jinping (left), Australian Prime Minister Scott Morrison (right)
Shoppers wearing face masks line up to buy fresh beef from Australia at a supermarket on July 4, 2020 in Hainan Province of China
Hostilities between Australia and China have soared in recent years after a number of diplomatic spats (Penfolds wine is stacked on a shelf in China)
‘Looking at exports of barley, copper, cotton, seafood and timber, sales of these products to other markets rose sharply,’ he said in the report.
However, the 212 per cent tariffs imposed on Australian wine are still hurting and beef producers are also still struggling to make up for the losses from China’s premium market.
There was an immediate downside for Australian coal exports which fell $6billion after ships were blocked from docking in Chinese ports in October.
Despite the initial slump Australian coal exporters have been quite successful in diverting to other markets.
‘By January 2021, Australian coal exports to the rest of the world were running $9.5billion higher in annualised terms than before the ban,’ Rajah said.
‘Thus, whatever impact China’s ban on Australian coal might be having, it doesn’t seem to be enough to shift the overall picture a great deal once trade diversion is taken into account.’
The graph shows Australian coal exports sanctioned by China (red line) that have shifted to other markets (blue line)
The graph show barley, copper, cotton, seafood, and timber exports to China that have shifted to other markets
This graph shows barley, beef, coal, copper, cotton, seafood, sugar, timber, and wine products sanctioned by China and redirected to other markets
The Australian coal ban also saw about dozen Chinese cities turn dark in December with residents forced to ration their electricity use due to the politically-inflicted own-goal.
The report also points out that Australia’s overall trade with China has barely budged despite about $20billion worth of Australian goods having been affected.
‘At the headline level, the effect of China’s trade sanctions on Australia’s export numbers has been completely swamped by the booming iron ore trade – which China hasn’t been game enough to touch,’ Rajah said.
The developing country still desperately needs Australian iron ore for steel making and in the wake of the coronavirus crisis the price has skyrocketed from about $61 a tonne in May 2020 to $166 in April this year.
The Chinese government attacked Australia over war crimes allegations by posting this falsified image on Twitter
The price surge has meant Australia’s overall annual trade merchandise exports to China have only fallen two per cent from $145billion in 2019.
Australian Trade Minister Dan Tehan said on Wednesday he is determined to help ‘team Australia win in Asia’ as the country pivots to new markets and away from it’s largest trading partner.
He told reporters ‘we can’t sit on our hands’ as Chinese trade officials refuse to engage with efforts to end the hostilities.
Chinese ambassador Cheng Jingye defended the Communist Party’s stance yesterday when he presented a propaganda video in Canberra in an attempt to downplay the mass detention of Uighurs Muslims in Xinjiang Province.
He said ‘the difficulty we now have in the bilateral relationship’ is because of Australia.
Packs of beef imported from Australia are displayed for sale at supermarkets on June 17, 2015 in Beijing
Despite the initial slump Australian coal exporters have been quite successful in diverting to other markets