Sour grapes: China’s wine backlash



The Federal Government is at a loss over China's latest move against the Australian wine industry as experts say the country continues to suffer "retaliation" by Beijing amid "intensifying China-Australia tensions".

On Tuesday, China launched an "anti-dumping investigation" into Australian wine exports, which accuses Australia of flooding China with cheap wine at cost or below cost prices in an effort to skew the market in Australia's favour.

Almost 40 per cent of Australian wine is exported to China in a $1.25 billion industry. Australia ships more bottles to the country than other wine producing regions such as France, Italy and the US.

Federal Trade Minister Simon Birmingham said the investigation was "a very disappointing and perplexing development" from its largest wine importer.

It comes as Australian officials admit they still haven't spoken to their Chinese counterparts since last year, with Mr Birmingham saying Australia is "willing to sit down no matter how difficult the issue and discuss it in a grown up like way … because that's what mature nations do".


Australian Prime Minister Scott Morrison meets with President Xi Jinping during the G20 in Osaka, Japan in 2019. Picture: Adam Taylor
Australian Prime Minister Scott Morrison meets with President Xi Jinping during the G20 in Osaka, Japan in 2019. Picture: Adam Taylor


China's announcement has put the Government and Aussie winemakers on edge, with officials and industry groups saying they are confused and worried about what will happen next.

"There's a lot of Chinese wines that are cheap and pretty decent wines at the low end of the market," BBC Asia Pacific editor Michael Bristow said.

"This row has great potential to cause a lot of damage to the Australian wine industry," he said. "It could have a major impact."

China's investigation is expected to be completed by August 18, 2021, under normal circumstances, but could be prolonged until February 18, 2022, due to the coronavirus pandemic, a Chinese ministry statement said.


The accusation is the latest in growing tensions between the two countries.

Already this year China has slapped tariffs on Australian barley and suspended some beef exports in what is a significant blow since almost 30 per cent of Australia's total agricultural exports go to China.

The strained relationship began after Australia pushed for a COVID-19 probe in May, which followed an exchange of insults over escalating trade tensions, leading Australia to be branded a "giant kangaroo that acts as the dog of the US".

In its most recent statement, China blamed Australia, for "echoing the 'trade baton' policy of the US Trump administration" and "was the first Western country to shun Huawei's 5G equipment".

"That discrimination against Huawei made Canberra a clear target for retaliation from Beijing," the Global Times reported.

However experts believe the source of the anger stems from the pandemic probe.

"It's certainly not too much of a stretch to think that far, that maybe it is an essence of retaliation for Canberra calling for an investigation into coronavirus," Bristow said.

"This attack on wine is part of a broader economic attack by China on Australia. China has also warned its tourists and students not to travel to Australia and all this came after Canberra called for an independent investigation into the coronavirus outbreak."

Bristow argued that in the past, China has had diplomatic arguments with South Korea, Taiwan and Norway in a similar vein to Australia and "used its economic muscle, its might, to try and force countries to comply diplomatically with its point of view".

"It's certainly not a stretch to think it's a little bit more than economics."

Yu Lei, chief researcher at the Research Centre for Pacific Island Countries with Liaocheng University also said the moves can be seen as a warning.

"The trade probe nevertheless launches against a background of intensifying China-Australia tensions. It might be regarded as a stern warning to the Australian Government, which has so far followed the US' lead in stirring up animosity toward China."





Rejecting the allegations of wine dumping, Federal Agriculture Minister David Littleproud said: "We are bitterly disappointed."

Mr Littleproud previously speculated the introduction of barley tariffs was payback for Australia's support for the investigation into the virus origins.

Earlier this year Mr Birmingham demanded an explanation after reports surfaced that China was preparing a "hit list" of Aussie exports to punish Australian farmers.

Mr Birmingham said Australia won't engage in a trade war with China but the latest move by Beijing was a deeply troubling and perplexing one.

"What we want is a constructive trading relationship, one where we can work together in the areas of mutual interest," Mr Birmingham said.

Asked whether he thinks China's trade strikes are related to the COVID-19 probe, Mr Birmingham said in May: "I can understand why people draw those links. In the end, China denies there's a link.

"The only thing we can do in defence of our farmers is engage in the process as constructively as we can."


Mr Birmingham said the country will respond at "face value" to the investigation, while supporting the wine industry.

"We will engage in every level we possibly can. This is a formal process that goes through China's equivalent of our own anti-dumping commission.

"We will be putting forward the most detailed case we can based on all the evidence we can muster, all of the facts that should all be able to demonstrate very clearly that Australian wine is not subsidised, it is not dumped, it is simply produced at premium levels in quantities and qualities that are in demand overseas."

Read the full statement from the National Farmers Federation here.

Originally published as 'Retaliation': China's blatant move