China sharply ramps up trade conflict with Australia over political grievances

China’s withering trade war with Australia is escalating sharply, prompting several of Australia’s allies to express support for a country that is heavily reliant on its giant Asian trading partner and vulnerable to political pressure.

Beijing on Friday announced new tariffs of up to 200 percent on Australian wine, which the country’s trade minister said could make business “unviable” for a $3 billion industry that sends 40 percent of its exports to China. The move adds wine to a growing list of Australian exports that have been targeted by Chinese authorities this year. Other products that have faced trade barriers include coal, timber, seafood and barley, totaling about $20 billion.

The feud between Australia and its largest trading partner, now in its sixth month, has drawn in unexpected casualties: dozens of workers on cargo ships carrying Australian coal — which have been denied entry into Chinese ports — have been seeking help after being stranded for months off China’s coast.
Australian Trade Minister Simon Birmingham said Friday that the series of Chinese moves, taken together, appear not to be driven by legitimate regulatory concerns and “give rise to the perception that these actions are being undertaken … in response to some other factors.”

“Doing so is completely incompatible with the commitments that China has given through the China-Australia free trade agreement and through the World Trade Organization,” Birmingham said in his toughest comments to date, while stopping short of threatening a formal complaint with international trade authorities. “It’s incompatible with a rules-based trading system,” he added.

China’s Commerce Ministry has provided technical reasons for holding up shipments of Australian grains and coal and has accused Australia of subsidizing wine to sell at unfair, low prices. But Chinese officials have on multiple occasions acknowledged that the roots of bilateral frictions were essentially political, and state media and Chinese academics have lambasted Australia for what they see as double-dealing: enjoying profits from economic relations with China while assisting in Washington’s anti-China geopolitical agenda.

In a move that drew criticism from the White House and British lawmakers, Chinese officials met with Australian media last week to publicize 14 grievances with their government. They include Australia’s public statements about Taiwan, Hong Kong’s autonomy and human rights in China, its calls for an independent review of the coronavirus pandemic’s origins in Wuhan, its treatment of Huawei and Chinese state media journalists in Australia, negative reporting about China in the Australian press and research on China being conducted by Australian Strategic Policy Institute, a think tank founded by the government.

Chinese Foreign Ministry spokesman Zhao Lijian followed up by saying that Australian authorities made “repeated, wrong acts and remarks on issues concerning China’s core interests” and asked them to take “concrete actions to correct their mistakes.”

“The actions against wine remove any remaining doubt this is anything other than Beijing using trade to punish Australia for political decisions,” said James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney.

The acrimony was rooted in distrust, Laurenceson said. Twenty years ago, Australian leaders assured their Chinese counterparts that Canberra would never break its alliance with Washington but that it would not join forces with the United States to target China. China today “no longer believes Australia is living up to that promise,” he said.

In recent months, the Chinese government has reacted particularly harshly to joint actions from the Five Eyes intelligence-sharing network that comprises the United States, Australia, Britain, Canada and New Zealand. After the alliance issued joint statements on China’s crackdown on Hong Kong’s opposition lawmakers, media and protest leaders last week, Zhao warned that China might “gouge and blind” the Five Eyes nations for meddling in China’s affairs and undermining its sovereignty.

Days later, Zhao asked Australia not to be “ideologically prejudiced” and accept the differences between the countries’ political system.

As Chinese trade pressure on Australia mounted this week, some voices in Washington and London called for more coordinated action, although few specific proposals have been aired so far.