China Power | Economy | East Asia | Oceania

Australian Import Bans Show the Sharp Edge of China’s Economic Power

The unilateral restrictions are intended to demonstrate to other nations the costs of challenging China’s interests.

Australian Import Bans Show the Sharp Edge of China’s Economic Power
Credit: Flickr/Ref54

In the same week that China’s President Xi Jinping pledged to promote “an open world economy” in a speech at an international trade expo, his government declared a raft of punitive restrictions on imports from Australia.

As my colleagues at The Diplomat have noted, China this week ordered traders to stop purchasing at least seven categories of Australian commodities: coal, barley, copper ore and concentrate, sugar, timber, wine and lobster. The government has ordered the halt to begin on November 6, with the South China Morning Post reporting that a ban on Australian wheat is likely to follow.

The reports confirmed fears that emerged last weekend, when tons of live lobsters from Australia were unexpectedly stranded at Chinese airports while waiting to be inspected by customs officials. This came shortly after Beijing imposed tariffs on Australian barley imports, and said it would block imports of timber from the state of Queensland due to pests.

The restrictions are set to deal a multibillion dollar blow to an economy that is already grappling with COVID-19-induced economic recession, its first in three decades. Iron ore, Australia’s biggest export to China, has reportedly been excluded from the import freeze.

While it is unclear if anything specific prompted the move by the Chinese government, the order is consistent with the recent deterioration in relations between Beijing and Canberra, which have roughly paralleled the souring relations between China and the United States. Chinese leaders were angered in 2018, when Australia barred the Chinese telecommunications giant Huawei from involvement in its national 5G network over national security concerns, shortly after passing an anti-foreign interference law geared mostly at fears of Chinese finagling in Australian politics.

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That was the dire state of ties in April, when Prime Minister Scott Morrison’s government publicly called for an independent probe into the origins of the coronavirus, sending relations into free-fall.

Since then, according to Bloomberg, China has barred meat imports from four Australian slaughterhouses and has initiated an anti-dumping investigation into Australian wine. Cotton purchases have also been suspended, while Chinese power stations and steel mills have been told to stop using Australian coal.

When asked about the import blocks, Chinese Foreign Ministry spokesman Wang Wenbin hinted at the political motive that clearly lies behind them. Speaking at a news briefing in Beijing on November 3, Wang said that the measures had been taken in accordance with China’s “laws and regulations,” and expressed hope that Australia would “do more to enhance mutual trust and bilateral cooperation … and bring the bilateral relations back to the right track as early as possible.”

This oblique message was later clarified by the Global Times, the Chinese Communist Party’s hawkish media mouthpiece, which published a quasi-analysis of the import ban on November 4, under the headline, “Australia nervous at losing Chinese market.” The article opined: “Chinese consumers’ confidence in Australian products would significantly drop if Australia continues to sabotage bilateral relations, which would cost Australia its best and biggest market, jobs and an opportunity to quickly recover from the pandemic.” It quoted a China-based analyst as saying that “being a mouthpiece for U.S. aggression against China will cost Australian jobs.”

The unilateral move, imposed in violation of World Trade Organization rules as well as the free trade agreement that was signed between China and Australia in 2015, is set to buffet an economy that has been pushed into recession by the coronavirus pandemic. China is Australia’s most important trading partner, and its exports to the country totaled A$169 billion (US $121.7 billion) in 2019. In particular, the sanctions on Australian lobster exports could pose a “dire threat” to the industry, which typically exports more than 90 percent of its catch to China. China is also the number one export market for Australian wine, an export worth around A$1.2 billion (US $864.9 million) per year.

In a statement on November 4, Trade Minister Simon Birmingham called on the Chinese government to play by the rules. “China has consistently denied any targeting of Australia and spoken about its commitment to trade rules,” the statement said. “In the spirit of their statements, we urge relevant Chinese authorities to address concerns of sectors like the seafood trade to ensure their goods can enter the Chinese market free of disruptions.”

Beijing’s move is clearly intended to make an example of Australia, a close American ally, in a way that is not possible with the U.S. itself, and to demonstrate the material costs of challenging Chinese interests.

In this sense, it strikes a discordant note with the keynote address that Chinese President Xi Jinping delivered at the third annual China International Import Expo in Shanghai on November 4. As my colleague Shannon Tiezzi noted of the speech, Xi aimed to reassure foreign firms that Beijing’s new focus on self-reliance and domestic consumption would not work to their disadvantage. On the contrary, Xi said, “Our aim is to turn the China market into a market for the world, a market shared by all, and a market accessible to all.”

After these actions against Australia, few can now doubt that this market access comes with firm political conditions attached.