Australia puts aside the Chinese trade dispute and opens up new markets

Last year when Australian barley imports were imposed as punitive grounds, the grain feared that farmers would reduce the industry by $ 2 billion.

But 12 months later Beijing fired its first shots In the trade dispute with Canberra, breeders have limited the damage by opening up new markets in Asia and Latin America.

“It’s disappointing to have played with political goals and lost the premium you get for selling to China,” said Mic Fels, a farmer in Western Esperance Australia.

“But Australian barley producers still had a good year, as the global market applied rates and we were revived when we found new markets.”

The experience of barley farmers has been repeated by analysts in Beijing as a result of Beijing’s “economic coercion” campaign against other sectors. Diplomatic relations have deteriorated since they launched an international investigation into the origins of the pandemic pandemic in Australia, Asia and China.

Coal, cow, wine, exports of timber, cotton and seafood face severe tariffs or technical barriers that threaten to break trade patterns and overturn the decade-long rise of Sino-Australian trade.

Goods sold to China account for more than a third of Australia’s exports, making Beijing the nation’s largest trading partner in 2019 with a two-way trade of $ 252 billion. In contact with the slightest sign of thawing, exporters are rushing to open up. markets and diversify.

Their efforts seem to be bearing fruit as the overall impact on bilateral trade remains as Australian goods exports fall by 2 per cent to $ 145.1 billion in 2020 compared to 2019.

Covid-19, record iron prices, changes in global market demand and fluctuations in exchange rates make it difficult to assess the exact impact of the measures. Analysts suggest that diversion of trade is undermining Beijing’s ability to strengthen Canberra and is a major success for the Chinese economy.

“At the moment Beijing’s skin is worse than a bite,” said Roland Rajah, an economist at the Lowy Institute, a Sydney-based think tank. “Exports to China have fallen in the areas affected by the sanctions, but most of the lost trade seems to have found other markets.”

He calculations The value of exports to China, which had tariffs from Beijing, fell by about $ 11.7 billion ($ 9 billion) a year. According to the analysis of goods statistics, the value of raw material exports to the rest of the world has increased by $ 13.4 billion.

Rajah cites the example of coal, the most valuable asset plagued by technical barriers. The annual value of Australia’s exports to China has fallen by $ 6.5 billion since port restrictions were imposed in September 2020, while exports to the rest of the world have increased by $ 9.1 billion.

The volume of total coal exports fell by 7.6 per cent to 205.4 million tonnes from 1 October 2020 to the end of April 2021, according to data from Braemar ACM, a worldwide broker of shipping vessels. The strong growth in exports to India, Europe and Latin America helped offset the loss of the Chinese market.

“Australian exporters have done a good job of diverting coal shipments to markets outside China, and China has imported more coal from Indonesia, Russia, Mongolia and South Africa, among others,” said Abhinav Gupta of Brahmar ACM.

Beijing’s pivot in the face of new coal suppliers is hurting Australian producers as they are losing the premium paid by Chinese customers. But it also harms China’s energy generators and steelmakers, mainly because it has better environmental quality than Australia’s coal competitors.

“China has costs with its trade diversion policy because it does not buy the most efficient customer or get high quality products,” said Mark Melatos of the University of Sydney.

Australian barley exporters have also switched to new markets since China imposed tariffs of 80 per cent after an anti-dumping consultation in May 2020.

“We have already started exploring new markets [anti-dumping] research, even though this had to be done remotely because of Covid-19, ”said Jason Craig in the cooperative that produces CBH group grains.

CBH reopened the Saudi Arabian market and shipped its first shipment to Mexico last year, which eased the blow of China’s loss. However, these new markets did not pay off first It was made by Chinese buyers and as a result, the entire industry suffered a loss of about $ 400 million.

Not all sectors pivoted so effectively. When Chinese customs officials left $ 2 million Australian lobsters due to security controls that rotted at Shanghai airport in November, the $ 750 million annual direct export industry was halted.

“The big difference is that the Chinese pay twice as much for live lobsters as other markets,” said Matt Taylor, general manager of the Western Australia Rock Lobster Council.

The industry has diverted lobsters to South Korea, the US and the whole of Australia but opening up new markets has been a challenge in a pandemic.

So has the Australian wine industry hammered According to Chinese tariffs, up to 218 percent. This caused exports to sink 96% a year to just $ 12 million between December and March.

“Lobsters, wine and now table grapes are hard hit, as China was the only practical market that took on volumes exported by Australian producers,” Jeffrey Wilson said at the Perth USAsia Center.

But he added that the rise in commodity prices over the past year has helped producers adjust to the loss of premiums paid by Chinese customers.

“Rather than ending Australian exports, what we have seen is a readjustment of global markets around bans. There will always be a market for almost all Australian exports, even if the price is a little lower. ”