Why China targets Australian wine is unclear

Antidumping regulations prohibit producers from selling any product for less than the market value.

According to the Chinese Industry Association, the market share for Chinese wine has dropped from 75% in the last four years to 50%.

The company claims that this is because Australian wine was being dumped in China (sold below market price). It has requested an antidumping duty of 202.70%, which would triple the prices at which Australian wines are sold.

Since 2019, Australian wine is now duty-free under the China-Australia Free Trade Agreement.

In the past financial year, a highly-publicized interview from April, in which China’s ambassador to Australia, Jingye Cheng, stated that the Chinese public felt “frustrated and dismayed” by Australia’s position on several issues and may boycott Australian products and services.

One of these issues was Australia’s request for an investigation into China’s handling of the coronavirus epidemic.

Australia’s criticism of the new Hong Kong Security Law and its decision to prohibit China Huawei from participating in Australia’s network for 5G are also irritants.

Antidumping investigations turn on highly technical data, often obtainable only through the analysis of confidential business information.

The first is that this is a simple tit-for-tat response to Australian antidumping measures taken against Chinese products such as electric cables, wind turbines, glass A4 copy papers, chemicals, herbicides, and aluminum and steel products.

Australia has implemented more antidumping laws against China than any other country.

Australian antidumping and countervailing measures by country,

China’s foreign ministry was quick to suggest its actions were a “normal antidumping investigation.”

The ministry may find that Australia’s wine industry has a specific market situation. This is a technical term for government intervention and subsidy, which Australia uses to impose antidumping duties.

Chinese investors who own wineries in Australia that sell to China directly via their distribution networks are a barrier. It would be hard to create an antidumping fine that did not also affect them.

A second possibility is that China wants to send a message through economic pain.

It would be smart to use wine. China does not need it to grow its economy. The added benefit is that it upsets Australia’s powerful agriculture lobby, which has governments on its side.

This latest investigation follows the sanctions against Australian cokewheat, and cattle.

Read more: Vital Signs: Australian Barley Growers are the Victims of Weaponized Trade Rules.

The aim might be for the targeted industries and their workers to pressure the Australian government to be less aggressive with China.

Another strategy would be to paint Australia in a bad light. China claimed (questionably) that it had stopped Australian beef and coal shipments due to health and quality concerns. Travel alerts are also used to turn the Chinese public against Australia.

It isn’t easy to decide which way to jump.

It is too early to say whether China is merely expressing its dissatisfaction at Australian antidumping measures against it or if it hopes to make Australia politically malleable.

Each one would require a unique response.

The investigation of antidumping could take as long as 18 months.

Both nations will lose if the battle is prolonged.

Read more: China might well refuse to take our barley, and there would be little we could do

But China can get its coal, barley, beef, and wine from elsewhere, although at a potentially higher cost or lower quality. It is also trying to diversify its sources of iron ore.

Australia’s economy is far more dependent on China than China’s is on Australia.

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