China Ends Trade Actions on Australian Barley and Coal, Signaling a Shift in Tactics
China has made a surprising move by ending its trade sanctions on Australian barley and coal, signaling a shift in its tactics. This decision comes after nearly three years of imposing heavy tariffs on Australian barley imports and implementing an unofficial ban on Australian coal. However, it appears that these trade actions have not achieved the desired results for China. In fact, they have had negative consequences for the nation imposing them.
The Chinese Ministry of Commerce announced that the anti-dumping and anti-subsidy tariffs on Australian barley would be lifted. These tariffs, which were initially set at 80.5%, had significantly impacted the Australian barley trade, causing a decline in the annual trade volume of this grain used for brewing, amounting to around A$1.5 billion ($986 million).
In addition to the barley sanctions, China had also imposed measures on Australian forestry products, wine, and lobsters, in response to various issues with Australia, including its call for an international investigation into the origins of the COVID-19 pandemic. These actions were part of Beijing’s attempt to exercise its influence and pressure on Australia through trade measures.
The recent shift in China’s stance can be attributed to several factors. One major factor is the change in political leadership in Australia, with the center-left Labor Party coming into power last year after nine years of the right-wing Liberal-National coalition’s rule. This change allowed for a reset in relations between the two countries without either party losing political face.
Moreover, China’s decision to remove trade actions on barley and coal suggests a recognition that these measures did not achieve their intended outcome. Australia, despite the initial adjustment period, was able to find alternative markets for its agricultural and mineral exports, often fetching higher prices.
It is worth noting that while China targeted Australian barley and coal, its imports of iron ore and liquefied natural gas (LNG) from Australia remained untouched throughout the dispute. This indicates that Beijing believed it could apply pressure on Australia by blocking less important or easily substituted commodities, while leaving the crucial imports unaffected.
However, the disruption caused by China’s actions on the coal trade resulted in higher prices for coal from other countries, indirectly benefiting Australian exporters who redirected their shipments to countries like India and Vietnam. As a result, Australia’s exports of coal have gradually recovered, approaching pre-ban levels.
Although it may take some time for the barley trade to fully rebound, the lifting of trade actions is expected to have a positive impact on both China and Australia. This move demonstrates China’s pragmatism and the recognition that unilateral bans and tariffs are not effective tools in achieving desired outcomes.
The failure of trade sanctions and tariffs can also be observed in the trade disputes between China and the United States. The tariffs imposed by the Trump administration on Chinese goods did not significantly reduce the trade deficit or result in substantial increases in Chinese purchases of American products. Instead, these actions escalated political tensions and imposed higher costs on the U.S. economy.
While coordinated and supported trade actions may yield some results, as seen in the case of Russia’s energy exports following the invasion of Ukraine, unilateral bans and tariffs have proven to be ineffective. This is a valuable lesson for nations engaging in trade disputes, highlighting the importance of a cooperative and balanced approach.
As the trade relationship between China and Australia begins to normalize, it is crucial to acknowledge that differences will persist on various fronts, such as human rights and differing views on world affairs. However, by adopting a more pragmatic and cooperative attitude, both countries can work towards mutually beneficial solutions and stronger bilateral ties.
In conclusion, China’s decision to end trade actions on Australian barley and coal signifies a shift in tactics. These actions, which proved to be unsuccessful, have served as a reminder that unilateral trade measures are unlikely to achieve the desired outcomes and may even backfire. The resolution of the trade disputes between China and Australia opens up opportunities for both nations to rebuild their economic relationship and foster a more cooperative approach moving forward.
The opinions expressed above are those of the author, a columnist for Reuters.
