China tightens trade restrictions on Australian imports

China has stepped up trade restrictions against Australia, with at least one clearinghouse suspending imports of a range of agricultural and mineral products, Hong Kong’s daily English-language newspaper, the South China Morning Post, reported on Nov. 3.

That same day, Bloomberg News also reported that the Chinese government had ordered commodity traders to stop purchasing products, including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster. The actions will take effect on Nov. 6, according to Bloomberg.

Australian trade minister Simon Birmingham told the Australian Broadcasting Corporation that his government was seeking more information about the Nov. 3 media reports, and said China would be breaching worldwide trading rules if it discriminates against Australian produce. 

“China has consistently denied any targeting of Australia and spoken about its commitment to trade rules,” Birmingham outlined in an emailed statement to Bloomberg on Nov. 3. “In the spirit of their statements, we urge relevant Chinese authorities to address concerns of sectors like the seafood trade to ensure their goods can enter the Chinese market free of disruptions.”

In a note today, Stratfor, a geopolitical intelligence platform, stated that Australian wool would also be subject to the trade restrictions and that China plans to ban Australian wheat imports at an as-yet-undetermined date.

On Nov. 2, Chinese authorities halted timber imports from Queensland, barley from Australia-based Emerald Grain, and increased scrutiny on rock lobster imports, according to Reuters.

The news agency said China also saddled barley with steep tariffs, suspended some beef imports, and launched anti-dumping investigations into wine imports as well.

“China seems determined to punish Australia and make it an example to other countries,” Richard McGregor, a senior fellow at the Lowy Institute, a think tank in Sydney, told Bloomberg. “They want to show there’s a cost for political disagreements.”

The Australian government is also seeking clarity over Beijing’s reported moves to discourage Australian coal and cotton purchases.

On Oct. 14, BHP (NYSE: BHP; LSE: BHP) reported it had received deferment requests from Chinese coal customers after reports that China reportedly put a freeze on accepting Australian coal, according to Reuters.

China is Australia’s most important export market, worth around US$104 billion last year, according to the Australian Government’s Composition of Trade Australia 2018-19 report.

Imports of refined copper, copper ore, and scrap copper from Australia made up 4%, 5%, and 2% of total Chinese imports in 2019, respectively, according to London-based Natalie Scott-Gray, senior metals analyst with StoneX, a global financial services company.

Australia’s ties with its top trading partner soured in 2018 when it banned China’s Huawei Technologies from its 5G network, citing national security concerns.

Relations between the two countries worsened in April when Australian Prime Minister Scott Morrison called for an independent investigation into the coronavirus outbreak. Tensions rose further when Australia formally rejected China’s territorial claims in the South China Sea in July and, earlier that month, suspended its extradition treaty with Hong Kong after Beijing imposed new security laws in the former British colony.

Australian copper miner Sandfire Resources (ASX: SFR) called the Nov. 3 news reports on Chinese trade restrictions “media speculation” and said its DeGrussa and Monty copper-gold mines in Western Australia, two of the Asia-Pacific region’s premier, high-grade copper mines, have continued to operate at full production rates and have maintained production guidance for the 2021 financial year.

“Sandfire maintains regular contact with its key customers and concentrate trading and smelter partners around the world in the sale of copper concentrate from its DeGrussa Operations in Western Australia, including customers within and trading into China,” it said.

But the company said if necessary, it was confident it could “increase sales contract volumes to existing and also new copper concentrate customers in non-Chinese markets (for example, into existing markets in Japan, Korea, the Philippines and Europe) based on its market soundings and engagement during its regular tender processes.”