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Of: TT
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1 of 3 | Photograph: Wang Kai / Nya Kina / AP / TT
Imported coal was unloaded at a Rizhao port in China’s Shandong province last year.
They have long been financial partners. But now Australia and China are on a collision course, arguing over wine, doctored images and the corona virus.
– I don’t think we will see a diplomatic breakthrough in the near future, says former Sipri chief Bates Gill.
It’s hard to know what caused the cup overflow for China. Maybe it was that Australia banned tech giant Huawei from participating in the 5G expansion, maybe it was Canberra’s take on the security legislation in Hong Kong. Or it was the demands for an independent investigation into the origin of the coronavirus.
“China is very disappointed with the way Australia has acted on some politically sensitive issues,” Weihuan Zhou said.
He is a researcher at the University of New South Wales in Sydney and is studying international economic law with China as a specialty. He describes China’s actions as a clear call against Canberra, that Australia must consider how to balance its political interests with economic ones.
– China took action and they are still increasing, he says.
Various trade barriers
In May, punitive duties of 80% were imposed on barley and imports of beef from four of Australia’s largest meat companies were halted. In November, taxes on wine almost doubled. Suspicion of price dumping has been identified as a reason.
Chinese media recently reported that the country is halting imports of Australian coal. Chinese Foreign Ministry spokesman Zhao Lijian posted a doctored photo on Twitter along the same lines, in which an Australian soldier smiles, holding a bloody knife to the neck of an Afghan boy, infuriating the prime minister. Scott Morrison and demanded an apology. Beijing claimed Australia was exaggerating.
– In recent months, we have seen some of the worst episodes in the Australia-China relationship, says Bates Gill.
He is a professor at Macquarie University and an expert on Chinese foreign policy. Between 2007 and 2012, he was also director of the Sipri Peace Research Institute in Stockholm.
When it comes to trade disputes, so far China has chosen to focus on products where it hurts, in addition to the aforementioned wood and lobster.
“Chinese importers and consumers will be affected, but not as much as Australia,” Zhou said.
Where it hurts
Australia exports between 50 and 60 percent of its cereals to China. It is a product that China can probably buy elsewhere. The same goes for wine, an Australian pride where winemakers also form a noisy lobby at home.
– China has been selective in choosing the sectors where it hurts, but where it is not so dangerous for the Chinese economy, either because it can subsidize similar goods or because the goods are not so important. But when it comes to coal, it’s not so easy for China to find the same quality elsewhere, says Bates Gill.
China is more dependent on iron ore and fossil gas from Australia. But no measures have been introduced there.
– If the Chinese decide to impose sanctions on iron ore and natural gas, then it would really increase and send a completely different signal. I imagine China is looking for alternatives there, but it’s not easy, says Gill.
“It wont happen”
On the other hand, Australia is unlikely to impose restrictions on its exports to China.
– Some have suggested, why don’t we charge more for iron ore or threaten to stop it? But that will not happen. Australia doesn’t act that way, says Gill, continuing:
– And while we do not get into a quasi-warlike situation, it is hard for me to see that the current government interferes with the private sector in a way that leads to price changes or export bans, he says.
Australia has found itself in a difficult situation. Both experts believe that trade cannot take revenge on China. China accounts for 40 percent of Australia’s exports, which is equivalent to one in every 13 jobs in the country.
– But I don’t think the Australian government wants to do that either, because it would only aggravate the situation, says Zhou and continues:
– This is also not good for the reputation of China. But if you look at the United States, which I think is the country that deals the most with trade sanctions, I think China is learning from the United States as it grows as an economic power and expands its influence on foreign policy.
“Very deep hole”
But while Australia can exert its influence among Western countries, which can lead to condemnation and the like, Gill is convinced that China has counted on it beforehand. An alternative is to try to go through the World Trade Organization, but it will probably take time.
– I think the conflict is a very deep hole from which it will take time to get out. The fundamental problem that generated the tensions cannot be resolved through diplomatic negotiations. These are structurally and fundamentally different views, rooted in our various systems. China is an authoritarian one-party state and Australia is a liberal democracy. They are nearly incompatible, says Bates Gill.
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