When China imposed punitive tariffs on Australian barley imports last year, grain farmers feared decimating a $ 2 billion industry.
But 12 months later Beijing fired the first shots in a trade dispute with Canberra, growers have limited the damage by opening new markets in Asia and Latin America.
“It’s disappointing that we’ve played for political purposes and we lost the first one you have to sell in China,” said Mic Fels, a Esperance farmer in Western Australia.
“But Australian barley producers have always had a good year because the global market has grown as tariffs have been applied and we have found new markets.”
The experience of barley farmers has been replicated in other key areas in what analysts have said was a campaign of “economic coercion” carried out by Beijing against Canberra. Diplomatic relations have soured since Australia backtracked on growing Chinese aggression in Asia and called for an international inquiry into the origins of the coronavirus pandemic.
Coal, beef, wine, Timber, cotton and seafood exports face rigid tariffs or technical barriers, which have disrupted trade patterns and threatened to reverse a decade-long boom in Sino-Australian trade.
Goods sold in China account for more than a third of Australian exports, making Beijing the nation’s largest trading partner with a $ 252 billion bidirectional trade in 2019. With a slight sign of a thaw in the United States. relations, exporters rush to open markets and diversify.
Their efforts appear to be paying off, as the overall impact on bilateral trade remains weakened with Australian exports of goods falling by 2 per cent to A $ 145 billion in 2020 compared to 2019.
Covid-19, record iron ore prices, Changes in global market demand and exchange rate fluctuations make it difficult to assess the accurate impact of measures. But analysts have suggested that the trade diversion undermines Beijing’s ability to arm Canberra strongly, and to give success to China’s economy.
“At the moment Beijing’s bark is worse than its bite,” said Roland Rajah, an economist at the Lowy Institute, a Sydney think tank. “Exports to China have collapsed in areas affected by sanctions, but most of this lost trade seems to have found other markets.”
He estimates the value of exports to China, which have faced tariffs from Beijing, fell by about $ 11.7 billion ($ 9 billion) a year. But the value of exports of these same products to the rest of the world has increased by 13.4 billion US dollars, according to the analysis of trade statistics.
Rajah cites the example of coal, the most valuable product hit by technical barriers. The annual value of Australian exports to China has dropped by US $ 6.5 billion since port restrictions were imposed in September 2020 while exports to the rest of the world have increased by US $ 9.1 billion. .
The volume of total coal exports fell by 7.6 percent to 205.4 million tons between October 1, 2020 and the end of April 2021, according to cargo tracking data from Braemar ACM, a global shipping agent. Strong growth in exports to India, Europe and Latin America has helped offset the loss of the Chinese market.
“Australian exporters have done a good job of diverting coal shipments to markets outside China while China has imported more coal from Indonesia, Russia, Mongolia and South Africa among others,” said Abhinav Gupta by Braemar ACM.
Beijing’s pivot for new coal suppliers hurts Australian producers, who lose the first one once paid for by Chinese customers. But it also harms Chinese power generators and steelmakers, particularly since Australian coal is often of better environmental quality than competitors.
“China bears the costs from its trade diversion policy because it does not buy from the customer more efficiently or receive them as high quality products,” said Mark Melatos, of the University of Sydney.
Australian barley exporters have also moved into new markets since China introduced 80 per cent tariffs in May 2020 following an anti-dumping investigation.
“We had already started looking for new markets during the [anti-dumping] an investigation, even if it had to be done remotely because of Covid-19, ”Jason Craig told the CBH group, a cooperative of grain growers.
CBH reopened the Saudi Arabian market and sent its first shipment to Mexico last year, which mitigated the blow of losing China. However, these new markets did not pay for it premium which Chinese buyers have done, resulting in a loss for the entire industry of about $ 400 million.
Not all sectors rotate so effectively. When Chinese customs officials left $ 2 million Australian lobsters to be able to at Shanghai airport in November for what they say were security checks, a $ 750ma-a-year live export industry has been brought to a tremendous halt.
“The big difference is that the Chinese have paid twice as much as other markets for live lobsters,” said Matt Taylor, chief executive of the Western Australia Rock Lobster Council.
The industry has diverted lobster to South Korea, the United States and across Australia, but the opening of new markets has been challenged in a pandemic.
Similarly, the Australian wine industry has been hammered from Chinese tariffs up 218 percent, which caused exports to plunge 96 percent year-on-year to just A $ 12m between December and March.
“Lobster, wine and now table grapes were hit hard because China was the only practical market to take the volumes exported by Australian producers,” Jeffrey Wilson told the Perth USAsia Center, a think -tank.
But rising commodity prices over the past year have helped producers adjust to the loss of premiums paid by Chinese customers, he added.
“Instead of ending Australian exports, what we have seen instead is that world markets are tightening around bans. There will always be a market for almost all Australian exports, even if it is at a slightly lower price.” .