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China's Beef With the Land Down Under

On May 11, 2020, the People's Republic of China announced that it would suspend imports of beef from four major Australian producers. The move comes as China is also reportedly considering anti-dumping and anti-subsidy tariffs on Australian barley imports of up to 80.5%, effectively shutting down the industry's business with China.

When looking at the situation in context, it seems as though the Chinese government is attempting to remind Australia that it holds a significant amount of leverage over the Commonwealth, while simultaneously reigning in calls for an investigation into China's handling of COVID-19 by the international community.

Less than two weeks ago, China’s Ambassador to Australia Cheng Jingye warned that there may be a de facto boycott of Australian goods if Australian Prime Minister Scott Morrison continued to press for an investigation. In an interview, he specifically said that the tourism, education, wine, and beef sectors may become targets in the face of perceived aggression towards the People's Republic. In response, Foreign Minister Marise Payne cautioned China from using "economic coercion" against Australia. The warning, however, has obviously been ignored by Beijing.

Beijing has sought to explain away and mask the reasoning behind its barley tariffs through technical justifications. For nearly 18 months, the Chinese government has been investigating allegations that Canberra violated World Trade Organisation (WTO) rules by providing subsidies to its producers, thus allowing them to sell large volumes of barley at low prices in China. The release of the investigative report is expected on May 19. Therefore, at least from their perspective, the imposition of anti-dumping tariffs could be explained away as a response to Australian wrongdoing.

Similarly, with beef, Beijing has claimed that the suspensions are for the good of the Chinese people. Officials contend that the producers failed to meet labelling and health certificate requirements. If China was to continue to see its beef producers targeted by China, it would see a large portion of its exports dry up. China is currently the biggest market for Australian beef, accounting for about 30% of the nation's exports.

This would not be the first time China has used technical justifications to punish a nation for going against its will. In 2010, for example, Japanese officials confiscated a Chinese fishing trawler after it collided with two Japanese coast guard vessels during a fishing trip near the disputed Senkaku islands. After the Japanese government refused to release the vessel, China halted all rare earth mineral exports to Japan. There was little the government in Tokyo could do to counter this blatant use of economic coercion, for at the time, China produced 93% of the world’s rare earth minerals, and essentially had a monopoly on production.

In 2012, after Philippine naval assets confronted Chinese fishing boats in a disputed sector of the South China Sea, hundreds of containers of Filipino bananas were left to rot after they were halted by Chinese customs officials for failure to meet Chinese health standards. Lastly, when South Korea activated a new missile defense platform over Chinese objections in 2016, a South Korean supermarket corporation saw 74 of its 112 locations inside China closed for several days due to supposed fire safety violations.

For the Australian government, there is little to do but develop new trade relationships with the United States, Canada, and Europe, and hope for the best in regards to China. The Commonwealth is tightly tied to China for a positive economic outcome. As the PRC's economic growth rocked in the late 1970s, Australia was well positioned to both meet demand and serve as a market for Chinese goods. Today, the PRC is Australia's largest trading partner in both exports and imports. According to the Australian Parliamentary Library Briefing Book, nearly 25% of Australia's manufactured imports come from China, while 13% of its exports are thermal coal to China. Its trade relationship with the PRC dwarfs any other partnership with any other nation.

This gives the People's Republic an immense amount of sway over the Australian government. While the United States possesses the military, free-market, and technological savvy needed to resist Chinese influence, Australia finds itself in a much more susceptible position. In a 2019 report analyzing how slowing economic growth in China would impact the Australian economy, Australia's Reserve Bank predicted that, "a sizable decline in economic activity in China is likely to decrease Australian economic growth, through lower exports and investment, raising unemployment and putting downward pressure on prices." Now take the scenario of an economic slowdown, and replace it with a diplomatic spat. If the Chinese government simply halted trade with Australia, the situation may very well be near catastrophic.

Winston Churchill once noted, "you cannot reason with a tiger when your head is in its mouth!" It would be wise for the leadership in Canberra to realize that unless they develop an economic independence from the PRC, they will continue to remain politically subservient to the Asian power.


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