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Will Australia embrace a new market due to Chinese trade restrictions?

It is estimated that nearly a third of Australia's foreign commerce is with China, which is also its biggest trading partner.

Brett Hosking, a grain farmer in Australia’s Victoria, has seen a considerable revenue decline ever since China imposed an 80.5% tax on Australian malt barley in 2020. He claimed that because they are forced to sell their high-quality malt barley to other markets for use as livestock feed, growers now estimate they are losing USD 50 Australian dollars per ton.

However, pressure is not simply being placed on barley growers. Due to Chinese trade restrictions starting in 2020, several Australian industries, such as timber, barley, sugar, lobster, and wine, have also had a negative impact.

After relations reached a new low when then-Prime Minister Scott Morrison called for an international investigation into the causes of COVID-19, farmers in these industries are optimistic that tensions between China and Australia will lessen under Australia’s new Labor Party government, which was elected in May this year.

Australian Foreign Minister Penny Wong termed her discussions with her Chinese counterpart Wang Yi as the “first step towards stabilizing the relationship” after their meeting last month.

Australia will “cooperate with China where we can,” according to Australian PM Anthony Albanese, but “doesn’t respond to pressures.”

However, after more than two years of tense relationships, some people are ready to completely move on, trying to diversify or leave while they can.

Although the majority have not completely shifted crops due to the necessity to take into account the long-term viability of their farms as well as market changes, Hosking stated that many barley growers are considering other crops or boosting their production of other grains.

It is estimated that nearly a third of Australia’s foreign commerce is with China, which is also its biggest trading partner. Despite the fact that Australia’s economy has generally fared well because of trade diversification and robust exports of raw materials like iron ore, trade restrictions have severely hurt sectors like the barley industry.

Hosking, who also serves as chair of Grain Growers, the national organization representing grain growers in Australia, described it as “certainly one of the most serious market issues we’ve faced.”

Although farmers normally raise a variety of grains and China is “still a tremendously important market” for grain overall, according to him, “there isn’t another market in the world that wants malt barley at the same level that China does.”

Similar efforts are being made to diversify the wine industry, which has been severely impacted by Chinese anti-dumping tariffs that can reach nearly 220%.

Following the enactment of the taxes, shares of Australia’s Treasury Wine Estates Ltd, the largest publicly traded wine producer in the world, fell by more than 13% while hundreds of shipping containers of wine accumulated at ports throughout China.

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