NEWSWine exports slump dramatically: Australia's political games backfire

Wine exports slump dramatically: Australia’s political games backfire

China’s anti-dumping campaign against wine imports from Australia is an example of how Europe’s wine nations could fare if they stand up to China on a political level. Such a danger certainly exists, because at the meeting of the G7 foreign ministers under the leadership of the USA and Great Britain on the topic of “A new world order after Corona”, the topics of “China’s human rights violations” and “unequal treatment of European companies in competition in China” are also being discussed. A look Down Under obviously shows how China has used sensitive measures to cause exports from the Australian beverage industry to plummet by 53 percent because of their “anti-Beijing strategy.”

AUSTRALIA (Canberra) – Australian Trade Minister Dan Tehan now called on Australian business to work to improve relations with China as bilateral ties hit their lowest point in decades. “Australian businesses are bearing the brunt of the deteriorating relationship. But with China remaining an engine of global growth, Australia’s approach to diversifying its trade will not succeed unless it improves its relations with China,” Tehan said.

Basis of the anti-dumping campaign and the effects

As explained in my post titled “China Imposes Punitive Tariffs on Australian Wine” after more than half a year of research, the Chinese determined that the Australian wine industry was dumping its products in China. According to the ministry’s analysis, it was found that Australian wines had been sold at an average subsidy value of 6.4 percent, resulting in significant damage to China’s wine industry. As a result, China’s Ministry of Commerce decided to impose tariffs ranging from 116.2 to 218.4 percent on imported Australian wines for the next five years, starting March 28.

Now, about six weeks after the punitive tariffs came into effect, data from the Australian Bureau of Statistics show a dramatic 53 percent drop in beverage exports to China. According to Wine Australia, Australian wine exports to mainland China reached A$1.28 billion (about €824 million) in 2019, which is still Corona-free, accounting for 44 percent of the country’s total wine exports.

Analysts say the market share of Australian wines in mainland China could drop even further if the punitive tariffs are maintained. In addition, some Chinese wine agencies have voluntarily stopped importing wine from Australia in recent months, turning to alternative sources such as Italy. In parallel with the slump in beverage exports, deteriorating Sino-Australian relations that began last year have also led to a drop of more than 60 percent in Chinese investment. In 2020, investments fell to one billion AUD (around 643 million euros).

Wine Australia
For years, Australia’s wine industry has built up the wine market in China and now risks a complete collapse. (Photo: Wine Australia)

Australia’s Accusations – China’s Trouble

Australia blindly followed the United States in targeting China. In fact, the government in Canberra began changing its policy toward Beijing in February 2020. It was in response to the then Donald Trump administration’s call to unite against China in the wake of the novel coronavirus pandemic. Australia’s Canberra-based government even called for an international investigation into the origins of the virus, ostensibly to hold China responsible for the pandemic. Indeed, Australia has since been at the forefront of the anti-China camp, joined by Canada and Sweden.

When China took a countermeasure, Australia accused it of hostility and abuse of its “trade advantages,” calling China a “vindictive” and “unreliable” trading partner. Some Australian politicians and experts even called for the country to decouple its economy from China’s.

This, of course, infuriated the Chinese, even though they know that the friction between China and the U.S. and the rising anti-Chinese sentiment in Australia are acting as a catalyst to intensify Sino-Australian disputes. Some Chinese netizens have even called for a boycott of Australian products.

How China assesses the issue

Essence of statements from China’s media: Australia has politicized the issue and tried to portray itself as a victim of “China’s bullying.” It has also mixed trade disputes with ideology to call for the formation of an inter-parliamentary alliance against China and accuse it of human rights abuses. And by playing up the “Chinese threat” theory, Australia is trying to play a bigger role in world politics.

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