FILE PHOTO: Bottles of Penfolds Grange, made by Australian wine maker Penfolds and owned by Australia's Treasury Wine Estates, on a shelf for sale
Bottles of Penfolds Grange, made by Australian wine maker Penfolds and owned by Australia's Treasury Wine Estates, on a shelf for sale, Aug. 18, 2020.

SYDNEY - China has launched an anti-dumping investigation into Australian wine imports, as trade tensions between Beijing and Canberra continue to fester. 

Australia owes much of its recent prosperity to China, its biggest trading partner. Last year, two-way commerce was worth $170 billion, but cracks are appearing in this valuable relationship.   

Australian wine growers are the latest to be caught up in escalating geo-political tensions. Exporters are accused of cutting their prices and taking market share from local companies in China. An anti-dumping inquiry has been requested by the Chinese Alcoholic Drinks Association. It will examine whether Australian firms are being supported by government subsidies. 

Canberra has insisted wine sales to China have been fairly priced, and officials have said they would cooperate fully with the investigation. 

Trade minister Simon Birmingham says Australian wine makers have done nothing wrong. 

“We find these suggestions deeply troubling and quite perplexing. Australian wine is by no means subsidized, it is by no means sold at or below anything other than market rates in the world market.  Indeed, Australian wine during the first half of this year proved itself to be the second highest priced wine sold in the Chinese market," Birmingham said. 

The investigation comes against a backdrop of increasing friction between Beijing and Canberra after the Australian government called for an international investigation into the origins of COVID-19, which first emerged in Wuhan, China late last year.    

China recently imposed tariffs on Australian barley, suspended some beef imports and told Chinese students and tourists it was not safe to travel to Australia because of allegations of racism.  China is also suspected of orchestrating cyber-attacks on Australian institutions, allegations that Beijing strongly denied. 

But Matt Canavan, a federal government lawmaker in Canberra, accuses China of economic coercion. 

“It is a pattern of behavior we are seeing from China and I do not think they can be a trustworthy business partner anymore the way they are acting, and I think every Australian business must be very careful about how much they get exposed to a jurisdiction whose behavior is increasingly threatening and bullying” Canavan said.

China has insisted its anti-dumping investigation into Australian wine would be undertaken in a “fair and just way, according to the law.” A foreign ministry spokesman denied suggestions it was politically motivated. 

As bilateral tensions grow, analysts fear that Australia's lucrative iron ore and coal exports could be next to suffer.