Australian agriculture firms brace for Chinese government ‘roadblocks’ and job losses from trade row

Australian agriculture companies in China are bracing for job losses and “roadblocks” from the Chinese government, as business ties between the two nations sour, according to a new report.

The results of a survey by the Australian Chamber of Commerce have been published as Australia further curbed foreign investment and responded to escalating tariffs and as Australia and China edged closer to an open trade war.

“Our members are fearful of significant job losses to come, particularly from those in the wine industry, as Chinese imports from Australia are curtailed,” said AustCham CEO Nick Coyle in a statement issued alongside the report on Tuesday.

More than half the 46 companies surveyed believed that a decrease in exports would cause job losses. The fears were stronger in the wine industry, where 73 per cent of respondents feared job losses. The survey was conducted between September and November, a period in which bilateral ties declined.

Australian agriculture products have faced tariffs and other restrictions as the overall relationship dipped in a series of diplomatic rows.

In November, China placed tariffs of up to 212 per cent on Australian wine imports, crushing business for the country’s winemakers.

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Beijing has also targeted a number of other Australian agricultural exports, such as beef, citing incorrect labelling and product descriptions on imported products.

Almost half of respondents said it would be either difficult or very difficult to diversify their operations to other countries.

In June, Australian Prime Minister Scott Morrison authorised the country’s Foreign Investment Review Board (FIRB) to review investments on national security grounds.

AustCham said that nearly half its members surveyed disagreed, or strongly disagreed, with Canberra’s increased scrutiny of foreign investments.

Tom Luckock, vice-chair of AustCham China, said he feared a response from Beijing. “There are knock-on effects from FIRB decisions; as FIRB tightens and the relationship deteriorates more roadblocks will be thrown up for Australian companies investing and trading in China,” he said.

Nick Marro, lead analyst on global trade at the Economist Intelligence Unit, said: “I think from a purely trade standpoint, we’re not in a ‘trade war’ scenario. The hostility is all pretty one-sided coming from China. We’re not seeing Australia’s delay, ban or put tariffs on wide swathes of Chinese imports, for example.

“Australia is operating quite differently than the US was, if we think about where we were at the height of the US-China trade war.

“Australia’s moves, like the tightening of FDI [foreign direct investment] rules, have been tinged by a souring perception of China, which is influencing and will continue to guide how these discussions unfold in the future,” Marro said.

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An October poll from Pew Research showed that 81 per cent of Australians had a negative view of China.

China is Australia’s biggest trading partner, and Beijing has targeted many of the country’s top exports. China confirmed that Australia had requested consultations with Beijing at the World Trade Organization (WTO) over anti-dumping measures placed on Australian barley, according to a statement from China‘s Ministry of Commerce on Thursday.

“We regret Australia’s request for consultation. It will be handled in accordance with the WTO dispute settlement procedures,” the statement read.

Mining products were Australia’s largest export to China in 2019 at US$71.4 billion, amounting to 68.7 per cent of the country’s export profile, according to China government statistics.

Animal products, including meat, were the second largest category. Australia exported US$11.4 billion of meat and other food products in that year, and US$2.5 billion in beverages, including alcoholic drinks such as wine.

Australia is seeking clarification from Beijing over reports that it has blocked Australian coal imports, saying it could be a “breach” of China’s commitments as a member of the WTO.

Beijing has denied allegations that China breached its trade commitments. China has questioned if Australia went against its own promises to allow open investment and trade after denying myriad Chinese deals in the past two years, including blocking Huawei Technologies Co from the country’s 5G network.