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#FreedomWine: Backgrounder on Australian wine exports to China and Hong Kong

Author: Wenchin Cheng 鄭汶津

(Click image to open Tableau) Economic statecraft is a strategy that deploys economic resources to achieve foreign policy goals. China has a long history of using economic statecraft to leverage against smaller economies like Australia and Taiwan.

After Australia requested an independent investigation into the origins of the coronavirus, China imposed unjustified tariffs, which includes an 80% tariff on Australian barley and another tariff of up to 200% on Australian wine. “Over the past 18 months, China has increasingly implemented trade disruptive measures targeting a wide range of Australian products,” Australian Representative to WTO George Mina wrote.1,2,3


Taiwan is another target of China’s economic coercion. China blocked sugar and wax apples from Taiwan, following the ban on Taiwanese pineapples, due to alleged biosafety issues. It was interpreted as a form of intimidation in response to Taiwan’s attempts to rename its representative office in Washington D.C..4,5,6


This backgrounder highlights the key trade events of Australian wine exports to China and describes the trends of wine exports in the three destinations - China, Hong Kong, and Taiwan.

Australian wine trade developments timeline

2020


On April 26, in an interview with Australian Financial Review, Ambassador Cheng Jingye (成競業) condemned the action called by Australia which requested an independent investigation into the origins of the coronavirus and the reform of World Health Organization (WHO). He said this action was politically driven and would undermine international cooperation. He suggested Chinese citizens may have bad impressions toward Australia due to the COVID-19 inquiry Australia has pursued, which in turn would affect their willingness to buy Australian wine and beef.7


In August, China’s Ministry of Commerce (MOFCOM) initiated an anti-dumping investigation and an anti-subsidy investigation towards Australian wine.8,9


On November 27, China’s MOFCOM concluded that the Chinese wine industry was negatively affected by Australia’s wine dumping. It decided to collect tariffs at rates between 107.1 percent and 212.1 percent starting on November 28.10,11


On December 10, China’s MOFCOM announced the preliminary ruling against Australian wine and saying Australian subsidies caused substantial damages to China’s wine industry.

It claimed to impose a temporary anti-subsidy duty ranging from 6.3% to 6.4%.12,13

2021

On March 26, China’s MOFCOM announced the results of the investigations for anti-dumping duty and countervailing duty investigations on wine from Australia, determining to impose five-year-long anti-dumping and anti-subsidy custom duties on Australian wine imports. The anti-dumping tariffs range from 116.2% to 218.4%.14,15,16


In June, the Australian Government has filed a formal complaint to the World Trade Organization (WTO) over China's imposition of duties on Australian wine. Despite the complaint, the authority was ready to initiate a conversation with China to resolve trade disputes. “Australia remains open to engaging directly with China to resolve this issue,” Said Dan Tehan, the Australian trade minister.17

What does the data tell us?

In 2020


From February to June, the total value of Australian wine exports to China and Hong Kong continued to grow steadily. However, in both destinations, the value dropped between June to August. From August to October, the total value of wine exports to China was growing and reached the peak (193,560,591 AUD) in October.


The total value of wine exports to China was decreasing sharply from October to December. Meanwhile, the total value of wine exports to Hong Kong tripled in the same period and it was steadily growing from September (8,121,422 AUD) to December (40,390,391 AUD). Also, the wine exports to Taiwan reached a peak in December, with a total value of 3,141,677 AUD.

The first and second quarter comparison between 2021 and 2020

Based on the data from January to June in 2020 and 2021, the total value of wine exports to China falls sharply in 2021. Conversely, the wine exports to Hong Kong slightly grow in 2021. Moreover, except for January, the wine exports to Taiwan increases compared to the previous year.


Get a closer look into trends in China and Hong Kong. The trends show that wine exports to China have fallen since March 2021. In addition, the wine exports to Hong Kong were rocketing since Feb 2021.


In closing, more data and investigation are needed to drive a causal relation between the trade developments and their consequences on the trade markets across regions. Still, this report adds value to bilateral trade and the wine industry.

References

  1. 中華人民共和國商務部. 商務部公告2020年第14號 關於原產於澳大利亞的進口大麥反傾銷調查最終裁定的公告. 中華人民共和國商務部. May 18, 2020. http://trb.mofcom.gov.cn/article/cs/202005/20200502965862.shtml

  2. 中華人民共和國商務部. 商務部公告2020年第15號 關於原產於澳大利亞的進口大麥反補貼調查最終裁定的公告. 中華人民共和國商務部. May 18, 2020. http://trb.mofcom.gov.cn/article/cs/202005/20200502965863.shtml

  3. George Mina. WTO Trade Policy Review of China. George Mina’s Twitter. October 20, 2021. https://twitter.com/AusWTO/status/1450752226482339840/photo/1

  4. Kelvin Chen. China to halt shipments of sugar apples, wax apples from Taiwan. Taiwan News. September 19, 2021. https://www.taiwannews.com.tw/en/news/4291652

  5. Lin Chia-nan. PRC bans import of Taiwan pineapples. Taipei Times. February 27, 2021. https://www.taipeitimes.com/News/front/archives/2021/02/27/2003752913

  6. Pratik Jakhar. China’s Economic Coercion Is More Bark Than Bite. Foreign Policy. October 5, 2021. https://foreignpolicy.com/2021/10/05/china-economic-coercion-taiwan/

  7. Embassy of the People’s Republic of China in the Commonwealth of Australia. Transcript of Chinese Ambassador CHENG Jingye's interview with Australian Financial Review political correspondent Andrew Tillett. Embassy of the People’s Republic of China in the Commonwealth of Australia. April 27, 2020. http://au.china-embassy.org/eng/sghdxwfb_1/t1773741.htm.

  8. 中華人民共和國商務部. 商務部公告2020年第34號關於對原產於澳大利亞的進口相關葡萄酒進行反傾銷立案調查的公告. 中華人民共和國商務部. August 18, 2020. http://trb.mofcom.gov.cn/article/cs/202008/20200802993244.shtml

  9. 中華人民共和國商務部. 商務部公告2020年第35號關於對原產於澳大利亞的進口相關葡萄酒進行反補貼立案調查的公告. 中華人民共和國商務部. August 31, 2020. http://trb.mofcom.gov.cn/article/cs/202008/20200802996981.shtml.

  10. 中華人民共和國商務部. 商務部公告2020年第59號關於對原產於澳大利亞的進口相關葡萄酒進行反補貼立案調查的公告. 中華人民共和國商務部. November 27, 2020. http://trb.mofcom.gov.cn/article/cs/202011/20201103018689.shtml

  11. 中華人民共和國商務部. 商務部公佈對原產於澳大利亞的進口相關葡萄酒反傾銷調查的初步裁定. 中華人民共和國商務部. November 28, 2020. http://english.mofcom.gov.cn/article/zt_cv/lanmua/202012/20201203019744.shtml

  12. 中華人民共和國商務部. 商務部公告2020年第58號關於對原產於澳大利亞的進口相關葡萄酒反補貼調查初步裁定的公告. 中華人民共和國商務部. December 10, 2020. http://trb.mofcom.gov.cn/article/cs/202012/20201203021646.shtml

  13. 中華人民共和國商務部. 商務部公佈對原產於澳大利亞的進口相關葡萄酒反補貼調查的初步裁定. 中華人民共和國商務部. December 12, 2020. http://english.mofcom.gov.cn/article/zt_cv/lanmua/202012/20201203023004.shtml

  14. 中華人民共和國商務部. 商務部公告2021年第6號關於對原產於澳大利亞的進口相關葡萄酒反傾銷調查最終裁定的公告. 中華人民共和國商務部. March 26, 2021. http://trb.mofcom.gov.cn/article/cs/202103/20210303047613.shtml

  15. 中華人民共和國商務部. 商務部公告2021年第7號關於對原產於澳大利亞的進口相關葡萄酒反補貼調查最終裁定的公告.中華人民共和國商務部. March 26, 2021. http://trb.mofcom.gov.cn/article/cs/202103/20210303047618.shtml

  16. MINISTRY OF COMMERCE,PRC. MOFCOM Issues Final Determinations in Antidumping Duty and Countervailing Duty Investigations on Wine from Australia. MINISTRY OF COMMERCE,PRC. March 27, 2021. http://english.mofcom.gov.cn/article/newsrelease/significantnews/202104/20210403049082.shtml

  17. David Littleproud and Dan Tehan. WTO action to defend Australia’s wine makers. Australian Department of Foreign Affairs and Trade media release. June 21, 2021. https://www.trademinister.gov.au/minister/dan-tehan/media-release/wto-action-defend-australias-wine-makers