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Australian Exporters Brace for More China Trade Pain

FILE - People taste wines from Australia at the Food and Agricultural Products exhibition at the third China International Import Expo (CIIE) in Shanghai, China, Nov. 5, 2020.

Australia’s trade war with China is intensifying with state media in Beijing reporting that seven categories of imports are to be restricted. China is Australia's largest trading partner, but tensions have become increasingly inflamed over allegations of political interference and cyber espionage, and the coronavirus pandemic.

“Deeply troubling” is how officials in Canberra have responded to reports that Chinese buyers have been told by authorities not to purchase Australian coal, copper, wine, barley, sugar, lobsters and timber. It is not clear why, and Australia is waiting for answers.

Simon Birmingham, the minister for trade, tourism and investment, said Chinese authorities had denied any coordinated effort was being taken against Australia.

A third of Australia’s farm exports are sold to China, and there are mounting fears that businesses are caught up in escalating diplomatic tensions.

In 2018, Australia banned Chinese telecom giant Huawei from its 5G network over national security concerns. Since then, there have been allegations of Chinese interference in Australia’s domestic politics and cyber espionage, as well as the detention of Australian citizens in China. Canberra has also taken a firmer stance on territorial issues in the South China Sea. The result is that bilateral relations are at their worst in decades.

Beijing has accused Australia of “anti-China hysteria.”

Canberra’s call earlier this year for a global investigation into the origins of COVID-19 further infuriated the Chinese.

Opposition lawmaker, Madeleine King, the shadow minister for trade, said it was a move that she supported, but complains that it was mishandled by the government.

“We support that, but we do take issue with that it was raised at a media appearance by the minister and that is not the way you run diplomacy, or how you set about achieving these things. And I think, you know, everyone can see that was a bit of a fail by the government but tomorrow is another day and you have to start to build this relationship back up,” Kind said.

State media in China is accusing Australian Prime Minister Scott Morrison of "rash participation in the U.S. administration's attempts to contain China.”

Canberra has tried to balance its ties with China, its biggest trading partner, and its long-standing security alliance with Washington.

One key area of trade has, so far, been immune from the dispute between Canberra and Beijing. Australia’s multibillion-dollar iron ore exports are a critical part of the huge infrastructure and housing projects that are helping to keep China, the world's second-biggest economy, afloat.

However, Australian resources giants BHP and Rio Tinto are highly dependent on Chinese demand, and analysts say they will be re-evaluating the political risks associated with working with China.