News National The immense toll China’s trade ban is taking on Australia’s prosperity

The immense toll China’s trade ban is taking on Australia’s prosperity

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China's trade bans have every export industry with the exception of iron ore. Photo: The New Daily
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The value of Australian trade with China for almost all industries has plummeted by 40 per cent since a trade dispute ramped up between the two countries.

Overall trade between the two nations is down just 2 per cent in value, with the situation propped up by strong demand for Australian iron ore.

But as soon as iron ore value is removed from the equation, the full and stark extent of retaliatory trade tariffs imposed by Beijing becomes crystal clear.

Officials from the Department of Foreign Affairs and Trade shared the bleak assessment in a Senate Estimates hearing in Canberra, under questioning from Labor’s Senate leader Penny Wong.

COVID’s impact

The figures reflect trade in the second half of the 2019 calendar year compared to the last six months of 2020.

Officials said the situation was still concerning, even taking into account the COVID-19 pandemic’s effect on global trade.

Australian trade to the rest of the world only dropped by 22 per cent in value during the virus-fuelled economic downturn.

“We just get a sense of, well, this is much bigger than the overall impact of the global economy – is that a fair way to say it?” Senator Wong asked.

“That is a fair way to say it,” DFAT’s Jennifer Gordon replied.

Australia and China have been locked in a serious trade dispute, with Beijing slapping Australian wine and barley with severe tariffs, and blocking imports of products including lobsters and cotton.

DFAT confirmed there were around 40 ships carrying Australian coal stranded off the coast of China, following restrictions on thermal and metallurgical coal.

Ships in limbo

Thermal coal exports to China were down 70 per cent in the six months to January 2021, while metallurgical coal had dropped 60 per cent.

Coal exports dropped 83 per cent when comparing the figures from the December quarter of 2019 to the December quarter of 2020.

DFAT secretary Frances Adamson said some of the ships had been there for “several months”.

“It’s been a really long time,” DFAT’s Elly Lawson added.

Barley exports to China were described as “negligible”, but “bumper crops” had led to an increase in exports elsewhere.

The last drop

Wine has also suffered considerably.

“Wine exports have fallen to less than a million dollars in January 2021,” Dr Gordon told the hearing.

“We exported $164 million worth of wine to China in October [2020], which was higher than normal because there was warning of the trade sanctions being applied, so there was a bit of a stockpiling effect.

“But since then, unfortunately, we haven’t been able to divert as much wine to the rest of the world, so there is a net cost to the wine industry — so it’s not the success story of barley.”

Officials confirmed new Trade Minister Dan Tehan’s efforts to gain an audience with his Chinese counterpart are going just as well as those of his predecessor Simon Birmingham, with Wang Wentao not responding to a letter from Mr Tehan sent earlier this year.

ABC