You are here: Home » International » News » Economy
Business Standard

China looks to 'punish' Australia: Lobsters, wine and coal become targets

China's blacklist -- delivered verbally to commodities traders -- includes coal, barley, copper, sugar, timber, wine and lobster

Topics
China | Australia | imports

Bloomberg News 

China
China has allegedly constructed 11 buildings on the Nepalese territory in the Humla district bordering Tibet.

What started as a political spat between Beijing and Canberra has become a one-sided trade war that threatens serious disruption for an expanding number of Australian exporters.

won’t allow of a swathe of Australian commodities and foodstuffs from as early as this week, according to people familiar with the matter. The curbs are a major escalation in Beijing’s pressure campaign following a two-year stand-off over issues from technology to the origins of coronavirus.

China’s blacklist -- delivered verbally to commodities traders -- includes coal, barley, copper, sugar, timber, wine and lobster. It doesn’t cover materials, like iron ore or natural gas, where import curbs could unduly damage China’s own

“The Chinese warned earlier this year that many of the goods that were replaceable,” Richard McGregor, senior fellow at Sydney-based think tank Lowy Institute said by phone. “Now they’re going about replacing them. seems determined to punish and make it an example to other countries.”

That means pain for global commodities groups hauling coal from huge mines in eastern Australia, or lobster farmers rearing the creatures off the country’s west coast. Winemakers, who’ve enjoyed a booming demand from China’s growing middle-class, may suffer.

Coal Country

The black stuff used to generate energy or make steel is the chunkiest of China’s targets. Coal accounted for about 9% of all Australia’s earnings from to last year, far behind the biggest contributor iron ore and a few notches below natural gas.

Chart

Primary Exports

Iron ore is seen as more immune from trade actions because China’s sprawling steel sector needs vast quantities of Australia’s high-quality ore. The remaining products now in China’s crosshairs all fall in the “other” category. Together they might account for about 5% of export revenues if wheat is included, according to Bloomberg analysis of Australian government data.

Wining and Dining

Beijing doesn’t seem concerned about its richer population’s demand for Australian lobster or fine wines. For premium wines, China is Australia’s biggest buyer, spending almost A$1.2 billion ($830 million) in the year through September, according to trade body Wine That’s about two and a half times bigger than its to the U.S.

Grapes Of Wrath

The industry has been bracing for trouble in its top market since China announced two trade investigations into Australian wine earlier this year. Shares of one Australian producer, Treasury Wine Estates Ltd., dropped as much as 3% on Tuesday, the most since September.

Chart

Copper Conundrum

The copper market spotlights the trade mismatch between the two countries. About 55% of Australia’s mined copper exports headed for the Asian nation last year. But Australia made up barely 5% of China’s needs, meaning it shouldn’t be too much of a problem for its smelters to source alternatives.

Metal Math

One Australian copper producer Sandfire Resources Ltd. fell as much as 9%, although the company said it was confident of finding alternative customers if needed. “The ore from Australia might still get shipped to China after blending or in refined form,” Eric Liu, head of trading and research at AKS Resources Ltd. said from Shanghai.

Chart

Wooden Result

Though Beijing will halt sugar and wood imports, they aren’t big export earners for Australia in trade with China. The Asian nation banned timber from the state of Queensland after finding pests during checks, the customs administration said last week.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, November 04 2020. 06:59 IST
RECOMMENDED FOR YOU
.