Bring on the Chinese commodity boycotts

Via the ABC:

China has fired its first shot in an increasingly bitter diplomatic row, threatening to slap major tariffs on Australia’s barley exports, that could rip hundreds of millions of dollars from the trade.

Relations between Canberra and Beijing have hit a fresh low in the wake of the COVID-19 pandemic, as Prime Minister Scott Morrison lobbies his counterparts for an international inquiry into the origins of the virus.

China’s Ambassador to Australia Cheng Jingye had previously threatened his country would impose economic sanctions if Mr Morrison continued to push for the probe, in what Trade Minister Simon Birmingham described as “coercion”.

Now, it appears China is set to make good on those threats and the first victims could be Australian barley growers.

Several major Australian grain groups issued a joint statement on Sunday saying the industry understands China is “potentially proposing to place tariffs on barley imported from Australia as a result of their ongoing anti-dumping and countervailing duties investigation”.

“The yet-to-be-finalised tariffs may include a dumping margin of up to 73.6 per cent and a subsidy margin of up to 6.9 per cent for barley imported from Australia,” it said.

The subsidy claims are understood to refer to Australia’s fuel rebate and drought support measures, and together with the dumping tariff would effectively put an end to Australia’s barley trade with China.

Government sources suggest the investigation could be used as a cover to impose the tariffs, in retaliation against Australia’s push for the COVID-19 inquiry.

At CCP mouthpiece, Global Times, the message is crystal. Drop the COVID-19 investigations and kowtow

Australia worries that China will impose tariffs on its exported barley, but it might face much bigger problems than barley if it continues to take unfriendly action against China, experts warned on Sunday.

The comments came after Reuters reported that China might increase duties on Australian barley, as bilateral ties between the world’s second-biggest economy and one of its biggest suppliers of farm products have been further damaged by Canberra’s most recent move on the origins of COVID-19.

“The Australian government is deeply concerned by reports that unjustified duties may be levied on Australian barley imports into China,” Trade Minister Simon Birmingham was quoted as saying by Reuters.

Ties between China and Australia have deteriorated in recent years, especially since Australia followed the US’ move in trying to blame China for the pandemic and launched political attacks on China.

Relations are the foundation of trade between two countries, and deteriorating ties could result in severe damage to bilateral trade between China and Australia, Jiang Yong, an expert at the China Institutes of Contemporary International Relations in Beijing, told the Global Times on Sunday.

On November 19, 2019, China extended for six months an anti-dumping investigation on Australia’s exported barley that started on November 19, 2018, and the investigation is due to finish on May 19 this year. This apparently caused Australia’s anxiety on potential tariffs.

But “China has more measures than tariffs to respond to Australia’s unfriendly actions if it keeps doing so,” Jiang said.

Citing an example, Jiang said that “most of Australia’s exports are bulk commodities such as agricultural products, which are highly replaceable, and amid the worldwide economic downturn caused by the COVID-19 pandemic, China could easily find some alternatives.”

China is a major trade partner of Australia, as 33 percent of the latter’s exported goods go to China,” Yu Lei, a chief research fellow at the Research Center for Pacific Island Countries, Liaocheng University, told the Global Times

“If Australia continues its unfriendly actions – even if the Chinese government doesn’t respond – many sectors of Australia’s economy including tourism, education and insurance could still be affected by deteriorating ties as Chinese people would vote with their feet,” Yu said.

The barley will get shipped anyway, just somewhere else, at lower prices for a while. Commodity markets are wonderfully fungible.

We should ignore this bullying. It’s time we pushed back to reset the relationship. CCP bribes, bullying and insurgents are not worth the money. All commodity markets will diversify over time.

We don’t need their students and tourists, either. There’s an automatic stabiliser for that too given less growth on those sectors will mean a lower AUD and other markets taking up the slack in due course.

It’s usually the CCP that delivers Australia the national interest policy it needs vis China in these matters.

Long may it continue.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. Barley. Barely worth a worry.

    Less for them means more for me. Goes well in pea soup.

    • Probably they don’t need it cos their pigs all died. Stand by for a Harry-led rabbit food export boom!

      • Not all pigs died from the novel to China, African Swine fever,also novel to Russia. China also last year hosted the Fall Moth which ate grain. I would not worry, feed could be short for stock in Aus and China was looking at lots of famine in next years. There is agric commodity shortage looming. Ie food shortages in the next few years.

    • mikef179MEMBER

      Yeah, China’s bark is worse than it’s bite. That’s why they bark incessantly like a gang of stupid teenagers. “Bro, you better do what I want or else…”

    • DominicMEMBER

      These threats are irrelevant. In a globalised world there is one pool of aggregate demand — if China is buying from someone else and not us then someone else who needs the goods will simply end up buying ours. It’s not fckn rocket science.

  2. CHAFTA needs to be torn up. It’ll happen sooner or later.
    Time to pivot to the real Asia. Our neighbours.

    • McPaddyMEMBER

      Yep. High time we left this abusive relationship while we still retain a shred of the nation we once were.

      • codeazureMEMBER

        I can hardly wait for China to become our abusive ex.
        Don’t let the door hit you on the way out guys…

  3. bskerr2MEMBER

    Let them, China has a food security problem and it’s part of their national security outlook. By what I understand food supply/production has been affected in some parts of the world and I am sure it will get worse so there could be other markets. If the global supply of food is disrupted then it’s going to mean China will find it harder to import from anywhere. Unless Australia stands up now it never will

  4. Andy McPherson

    at lower prices for a while.

    This is why we won’t boycott China. No farmer or miner or university is going to accept lower prices for their goods or products. They have powerful lobby groups.

    Australia also is corrupt and does not speak with one voice – look at how Andrew Forrest highjacked a recent ministerial press conference by bringing along his Chinese ambassador friend. A CCP member Gladys Liu already sits in the Australian parliament.

    It is time for Australians to accept their Chinese overlords with grace and stop whinging.

    • Was there mention of ‘us’ boycotting Chyna? Yeah Nah. The swap lines with the US Fed is the only thing that matters and Slummo has been told exactly that and will do what USA wants and I for one am glad its out of our hands because I generally agree as to our treacherous lobbyists.

      • The illusion of free will. Australia changed when that US rear admiral or whatever it was visited a couple of years ago and declared the US was building a base in Darwin, it was quick and decisive and it’s all been pretty much one way since then. Chat about us pivoting to Chy-na is wass.

  5. Our economy may suck but if we’re going to burn it down, it’d be nice if we gained something from that act of destruction. Kissing the US’ butt will get us nothing from them, especially with Trump in office.

  6. I bet there are zero Barley farmers on this website. It’s nice to wage war while sitting comfortably in your ivory tower CBD dog box/ suburban spit of a block 😂

    • DominicMEMBER

      The barley farmers will be fine. If the Chinese don’t buy it, someone else will – little more than a minor inconvenience.

      • As Nassim Taleb says, we should all have skin in the game. Otherwise, it’s just cheap talk like JI2012 above. So instead, why don’t you stop ordering cheap Chinese stuff off Amazon Prime?

        You’ll be fine 🤣 …

        • I have children and I’d rather they didn’t grow up in a country economically and politically dominated by the CCP thats my skin in the game, what’s yours?

          • Skin in the game means making a shared sacrifice. What exactly are you sacrificing? Can you please spell it out for us.

        • McPaddyMEMBER

          But we all do have skin in the game. We all pay when we sacrifice our sovereignty. A failure to account for costs like those are a large part of why we find ourselves in many of the problems we face. Gerry and Harry make a lot of money from out of control immigration programs. The rest of us pay with depressed amenity and wages growth. They fight tooth and nail for every marginal customer that can be shipped in. We give up what were our entitlements (and those of our children) to support them.

      • Precisely, the Chinese buying supply from elsewhere means someone else will buy our produce. If the Chinese want to cut their nose off to spite their face, be my guest. China is in dire need of resources and it’s why we have enjoyed a healthy surplus with them, they need what we have more than we need what they produce.

        China is already facing high internal inflation forces, no longer being a cheap place to produce goods, raising tariffs will just raise their internal costs and create more incentive for manufacturers to move to cheaper and more politically friendly regions.

      • No. I am also not the one advocating for a trade war with China.

        Trump can afford to print/deficit spend to compensate US farmers (still, a lot of them went BK) during his trade war with China (which I supported). Your approach seems to be “She’ll be right, mate” 😂

        • Okay you’re not a barley farmer … what exactly are you, and what do YOU want?

          • I am an Aussie who wants sensible policy proposals instead of jingoistic, xenophobic rhetoric. Look at Trump. Even he manages to wage a semi successful trade war while praising Xi 🤣

        • “Skin in the game means making a shared sacrifice” What utter nonsense
          You are exactly the kind of suburban know nothing you purport to look down on. You know as much about China as you do about broad acre farming.
          Why should i answer your questions if you refuse to answer mine or anyone elses?

    • The FNG.MEMBER

      My inlaws are. They might not like it if they have barley in already, I dont know that situation. But I think sheep prices are so completely mental right now they dont GAF.

  7. The investigation is meaningless , its the semantics of Australian leaders daring to question the CCP, on any issue.
    Thats why they are so angry.

  8. MajulesMEMBER

    food security is one of the worlds greatest challenges going forward. surely we hold the whip hand going forward. a country cannot function efficiently without food supply at a affordeable price and you cannot convert your face mask factory to manufacture food unless they go to soylent green. bring it on!!

  9. One day you may be old and sick as well.
    I hope you remember the words of your post when you are put out on the footpath; marked with some sort of token to signify pestilence, waiting for transport to come and process your body.

  10. johnwilliamsmithMEMBER

    we don’t need their belt and road either. We should be extricating ourselves from Chinese CCP malevolency as a priority.

  11. Do you know why/how barley is sold $275 on domestic market and $210 to China ? no wonder China is talking about dumping

  12. Diogenes the CynicMEMBER

    Barley is mostly used for beer production and animal feed. Beer production in China has been negative for a while, the lockdown may have worsened this. With the pig flu going through last year they are probably at record low herd so this could be an easy lever for them to pull.

  13. Shades of MessinaMEMBER

    Everyone should do their bit and drink an extra couple of beers per week, that will take care of the barley.

    Time to reclaim beer drinking as an “Aussie as” tradition despite what the Canadian Club ads say.

  14. My anger’s pointed squarely at the CCP gimp b1tches like TwigXi, Koch, Stokes, Carr and the host of CCP media apologists who’d sell out the country for a few lousy dollars.

  15. Economics 101

    It was to be banned last november – this isn’t new.

    https://www.graincentral.com/markets/export/barley-anti-dumping-investigation-remains-a-sleeping-giant/

    Further it is in order to meet the Chinese side of the trade deal with the US.

    The US wedged Australia, Canada, New Zealand and tried with the UK to get us to abandon Huawei, forced China to the trade table – China dropped imports from Canada, Australia etc took up US agricultural exports and the US allowed Hauwei back in.

    Well done Australia….for the win.

  16. CCP Pure Evil

    Time to double down on an investigation.

    SARS 1 became a regional pandemic because of a Chinese cover up, SARS 2 became a global pandemic because of a Chinese cover up.

    Let’s imagine Trump silenced and murdered whistleblowers that tried to warn the American public about a new virus coming out of a market, with the unchecked spread of the virus leading to a global pandemic. Would the world’s leaders and media apply the blowtorch to Trump?