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More Trade Tensions Between China and Australia

A Chinese paramilitary policeman stands guard at the Australian Embassy in Beijing, Sept. 1, 2020.
A Chinese paramilitary policeman stands guard at the Australian Embassy in Beijing, Sept. 1, 2020.

China appears to have escalated a trade dispute with Australia. Australia’s cotton industry says Chinese mills are being told not to process Australian imports. The reported action follows restrictions in China on Australian coal and other agricultural commodities.

Australia’s cotton industry is worth about $565 million annually. China is by far its biggest customer, but there are concerns cotton growers are the latest victims of a simmering trade war.

Chinese mills have reportedly been told not to buy Australian cotton, and industry representatives fear that exports to China could face Beijing-imposed tariffs as high as 40 percent, which would likely make the trade unviable.

To add to the frustration, cotton producers are beginning to plant for what is forecast to be a large crop after a long drought in Australia.

Adam Kay is the chief executive of Cotton Australia, a leading trade organization. He believes the ban on Australian imports into China is widespread.

“Most of the mills we have spoken to have been impacted. So, you know, it is concerning for us because something like 65 percent of our Australian crop does go to China at the moment and it has been a really mutually beneficial relationship and to have that jeopardized is a real worry,” Kay said.

The Australian government is urgently trying to clarify the situation, although government ministers have said extracting information from their Chinese counterparts is hard.

Bilateral ties have soured in recent years. In 2017, Australian intelligence agents warned of growing Chinese attempts to influence Australian domestic politics. A year later, Australia banned the Chinese technology company Huawei from its 5G telecommunications network because of national security fears. This year, Australia’s call for a global investigation into the origins of the new coronavirus, which was first detected in China, provoked more anger from Beijing.

No-one is quite sure where all this leaves Australia’s relationship with its biggest trading partner, but the trade disputes appear to be intensifying.

China has reportedly banned some imports of Australian coal, and has imposed restrictions on barley and meat, and launched an anti-dumping investigation into Australian wine imports. China has also warned students and tourists not to visit Australia because of allegations of racism.

Beijing has also been agitated by Canberra’s close military ties with the United States, and analysts have said Australia needs deft and delicate diplomacy to protect its pivotal trading relationship with China.