The seafood, dairy and wine industries could be in the firing line after Australia angered China by offering sanctuary to Hong Kong residents, experts have told Daily Mail Australia.
Beijing has threatened ‘further action’ after Canberra cancelled its extradition treaty with Hong Kong and extended visas for its residents who fear they could be unfairly arrested under China’s new national security law.
Experts fear there is a ‘high likelihood’ of more tariffs after China slapped an 80 per cent tax on Aussie barley and banned some beef imports following Canberra’s call for an inquiry into the coronavirus outbreak.
The seafood, dairy and wine industries could be targeted by China. Pictured: A Tasmania dairy farm
Dr Pichamon Yeophantong, a senior lecturer in international relations at UNSW, said: ‘It’s hard to anticipate what Beijing’s next move will be but there is a high likelihood of further tariffs, perhaps on seafood, dairy and wine.
‘The other option would be coal which has been targeted before and would be an easier target than iron ore because there are more alternative suppliers.’
Dr Yeophantong warned China may continue telling students and tourists not to travel Down Under in an apparent attempt to damage the Australian economy.
Last month state media claimed Australia was ‘racist’ and warned citizens they could be victimised if they travelled here.
‘China could also increase messaging to its citizens telling them not to come to Australia,’ Dr Yeophantong said.
‘Given what is happening with coronavirus spreading here at the moment, they may find a more willing audience.’
Australian fishermen unloading seafood in Sydney Fish Market wharf. Seafood is a huge export to China
Australian PM Scott Morrison said the country was under attack from a ‘sophisticated state-based actor’ targeting companies, hospitals, schools and government officials (pictured, Morrison meeting Chinese leader Xi Jinping)
However, Dr Yeophantong said there were good reasons why Beijing’s response might be limited.
‘Even though tariffs will hurt Australia, they also harm Chinese business interests so Beijing will have to take that into account,’ she said.
‘Also, China has to be careful because any moves could trigger a chain reaction in other countries and Beijing can’t afford to jeopardise its global reputation.’
‘Thirdly, the China-Australia free trade agreement means Beijing cannot go “completely crazy” because it is limited in how it can respond’.
Under the 2015 agreement, China cannot impose any tariffs except on wool, beef and milk powder under a special clause.
All the consequences further action brings should be shouldered by the Australian side
Chinese Foreign Ministry
But Dr Yeophantong warned Beijing may be prepared to temporarily break the deal. ‘If one side walks away there is not much the other can do about it,’ she said.
‘Trade disputes are settled by a lengthy and costly international legal process so countries sometimes resort to diplomatic pressure instead.’
Or, instead of tariffs, China could make imports more difficult with extra customs checks.
Dr Weihuan Zhou, also a senior lecturer at UNSW, said he believes China will retaliate because the government ‘has a strong view that this is an intervention into domestic affairs and national sovereignty.’
He said agricultural products such as milk power were most likely to be targeted.
The ‘Special Safeguard Mechanism’ in the free-trade agreement allows China to slap tariffs on wool, beef and milk power once a threshold level of each is imported in a calendar year.
Chinese President Xi Jinping after inspecting the troops during a parade to celebrate the 70th Anniversary of the founding of the People’s Republic of China at Tiananmen Square
‘China has already done so on beef, leaving milk powder the only option,’ Dr Zhou said.
‘But there needs to be a factual finding that Australia’s milk powder exports to China in 2020 has exceeded the trigger for this year before China can increase the tariff.’
Dr Yeophantong said that the threshold level after which milk powder imports can be taxed will likely be reached this year.
‘In light of this, dairy might be the more viable target for Beijing to impose higher tariffs once the export threshold is met and the preferential tariffs assured under ChAFTA are withdrawn,’ she said.
‘But as previously mentioned, Beijing will still need to be cautious with how it wields its economic levers, especially considering how Chinese businesses also have an increasing stake in Australia’s dairy and other key export sectors.’
Scott Morrison is granting five-year visas with a pathway to permanent residency for students and skilled migrants from Hong Kong after China imposed draconian new laws on the territory.
China’s new national security law prohibits what Beijing views as secessionist, subversive or terrorist activities or as foreign intervention in Hong Kong.
Critics say it curtails freedom of speech and pro-democracy protesters have since been charged for holding flags, posters and pamphlets.
Police officers detain protesters during a rally against a new national security law on the 23rd anniversary of the establishment of the Hong Kong Special Administrative Region on July 1
New visas for Hong Kong residents
· Temporary graduate and skilled workers will be offered an additional five years of work rights in Australia on top of the time they’ve already been in Australia, with a pathway to permanent residency at the end of that period.
· Students will be eligible for a five year graduate visa from the conclusion of their studies
· Future Hong Kong applicants for temporary skilled visas will be provided with a five year visa, based on meeting the updated skills lists and Labour Market Testing requirements.
· Existing arrangement will continue to apply for those applicants who study and work in regional areas to help address skills shortages in those areas, with pathways to permanent residency after 3 years.
Also in train are new incentives and arrangements to attract Hong Kong-based businesses to relocate to Australia.
The government will particularly target businesses that presently operate their regional headquarters out of Hong Kong who may be looking to relocate to a democratic country.
In a strong warning last night, China’s foreign minister said it sees Australia’s move regarding Hong Kong as foreign interference in its internal affairs.
‘We would reserve the right to take further action. All the consequences further action brings should be shouldered by the Australian side,’ the ministry said.
‘Any conspiracy to exert pressure on China will not succeed.’
The Chinese Embassy in Canberra added: ‘The Australian side has been clanking that they oppose foreign interference.
‘However, they have blatantly interfered in China’s internal affairs by making irresponsible remarks on Hong Kong related issues. Its hypocrisy and double standard is exposed in full.
‘We urge the Australian side to immediately stop meddling in Hong Kong affairs and China’s internal affairs under any pretext or in any way.
‘Otherwise it will lead to nothing but lifting a rock only to hit its own feet.’
Australia has launched six warships into the Indo-Pacific for training operations ahead of huge show of force in the region with the US Navy. Pictured: HMA Ships Stuart (foreground), Hobart and Canberra (background) depart Fleet Base East in Sydney
China is Australia’s largest trading partner, buying about a third of all exports worth $135 billion a year.
Beijing and Canberra have been at loggerheads in recent weeks after Australia led global calls for an inquiry into the origins of Covid-19, which first surfaced in China late last year.
China retaliated by slapping an 80 per cent tariff on Australian barley, suspending beef imports and telling students and tourists not to travel Down Under in an apparent attempt to damage the Australian economy.
Last month Scott Morrison said cyber-attacks by a state-based actor have increased dramatically in recent weeks and targeted ‘all levels of government’ as well as ‘critical infrastructure’.
Security chiefs say the hackers are using the so-called ‘spear-phishing’ method to steal sensitive login details by sending scam emails, and carrying out regular ‘reconnaissance’ to find weak points in Australia’s defences.
How China’s feud with Australia has escalated
2019: Australian intelligence services conclude that China was responsible for a cyber-attack on Australia’s parliament and three largest political parties in the run-up to a May election.
April 2020: Australian PM Scott Morrison begins canvassing his fellow world leaders for an inquiry into the origins of the coronavirus pandemic. Britain and France are initially reluctant but more than 100 countries eventually back an investigation.
April 15: Morrison is one of the few leaders to voice sympathy with Donald Trump’s criticisms of the World Health Organization, which the US president accuses of bias towards China.
April 21: China’s embassy accuses Australian foreign minister Peter Dutton of ‘ignorance and bigotry’ and ‘parroting what those Americans have asserted’ after he called for China to be more transparent about the outbreak.
April 23: Australia’s agriculture minister David Littleproud calls for G20 nations to campaign against the ‘wet markets’ which are common in China and linked to the earliest coronavirus cases.
April 26: Chinese ambassador Cheng Jingye hints at a boycott of Australian wine and beef and says tourists and students might avoid Australia ‘while it’s not so friendly to China’. Canberra dismisses the threat and warns Beijing against ‘economic coercion’.
May 11: China suspends beef imports from four of Australia’s largest meat processors. These account for more than a third of Australia’s $1.1billion beef exports to China.
May 18: The World Health Organization backs a partial investigation into the pandemic, but China says it is a ‘joke’ for Australia to claim credit. The same day, China imposes an 80 per cent tariff on Australian barley. Australia says it may challenge this at the WTO.
May 21: China announces new rules for iron ore imports which could allow Australian imports – usually worth $41billion per year – to be singled out for extra bureaucratic checks.
June 5: Beijing warns tourists against travelling to Australia, alleging racism and violence against the Chinese in connection with Covid-19.
June 9: China’s Ministry of Education warns students to think carefully about studying in Australia, similarly citing alleged racist incidents.
June 19: Australia says it is under cyber-attack from a foreign state which government sources say is believed to be China. The attack has been targeting industry, schools, hospitals and government officials, Morrison says.