Canberra has advised Australian businesses to seek new export markets and reduce their reliance on China as a worsening dispute threatens up to A$6bn in annual trade.
Government officials delivered the warning to exporters during a conference on Thursday to discuss informal threats relayed by Chinese importers to Australian exporters. The importers said Beijing planned to ban wine, lobsters, copper and other selected goods from Friday.
One industry participant on the call told the Financial Times that they had been advised by officials that bilateral relations with China were unlikely to recover in the short-term and they should start exploring other options.
The warning follows Beijing’s decision to impose punitive tariffs on Australian barley, restrict beef imports and begin an anti-dumping inquiry into wine exports following Canberra’s call in April for an inquiry into the origins of the Covid-19 outbreak in Wuhan.
Since then, diplomatic and trade relations between the nations have sunk to their lowest level in a generation and some Australian exporters have experienced difficulties in getting their products through Chinese customs.
This week up to A$2m ($1.45m) worth of Australian rock lobster was lost at Shanghai airport when local officials ordered a series of new health and safety tests. Some coal exporters have said they have also faced delays.
Simon Birmingham, Australia’s trade minister, said on Friday that the Chinese government had denied there was any co-ordinated effort to clamp down on Australian products. But the minister said there was a great deal of inconsistency in what Canberra had heard from Beijing and what exporters were experiencing.
“The ongoing reports that we’re getting from industry and a range of different news sources are deeply troubling, and there’s no denying or getting away from that fact,” he told Australian radio.
Mr Birmingham said the trade-related problems over recent months had dramatically increased the risks for Australian exporters to China and suggested that some businesses would inevitably begin to look at alternative markets in Asia, such as Japan, Korea and Indonesia.
China is Australia’s largest trading partner with two-way trade worth A$252bn last year, which makes any attempt to diversify to other markets difficult. The timing of the trade tensions is also causing exporters pain, as demand for certain products, such as wine, has fallen sharply during the coronavirus pandemic.
There appears to be little prospect of any rapid recovery in bilateral relations. The state-run China Daily on Friday published an editorial warning Australia that it would “pay tremendously for its misjudgement” in colluding with Washington in trying to contain China.
Richard McGregor, an analyst at the Lowy Institute in Sydney, said: “The Australian government seems resigned to taking an economic hit, even in the middle of a recession, as they can hardly do an about-turn on foreign policy under such naked pressure.”
Canberra has admitted that phone calls to Chinese counterparts are no longer being returned, with Mr Birmingham saying on Friday that it was disappointing that Beijing was still refusing to engage at ministerial level.