After China slapped an 80 percent tariff on Australian barley this week, Australia’s Agriculture Minister David Littleproud said that his country would not seek a tit-for-tat retaliation against China by imposing punitive trade policies, noting that “there’s no trade war,” according to an ABC report on Tuesday.
His statement hints at the hope that the recent trade rows between China and Australia could be limited to barley and beef, unless there is a new conflict between the two sides. It seems the Australian government has no intention of sowing new troubles in its trade with China, but the possibility of deteriorating tensions escalating into a trade war should not be ignored.
Given the principles of free trade and reciprocity to which China has long adhered, there are reasons to believe that China will not take the initiative to start a trade war so long as no party deliberately escalates tensions further. However, we hope the Australian can release more goodwill and take more measures to repair its relationship with largest trading partner China.
It would be of little concern if Australia wanted to go to the World Trade Organization to seek a tariff resolution with China. Its willingness to get back on track to resolve trade disputes is welcome, because China has always supported the settlement of trade disputes within the framework of open and transparent international trade rules.
On the Chinese side, there is ample evidence to show its decisions on beef and barley imports were made on the basis of facts. According to Chinese statistics, Australia’s barley imports to China increased by 67.14 percent from 3.87 million tons in 2014 to 6.48 million tons in 2017, with the import price down more than 31 percent from $288.72 per ton to $198.05 per ton.
Yet, as the situation has been changing rapidly, it cannot be taken for granted that the trade spat could not develop into a trade war. The news came on Wednesday that Chinese customs authorities have announced an adjustment to the quality inspection and supervision of imported iron ore. That move, coming amid tensions, may lead some to believe it targets Australia, though there is no evidence that the new adjustment will have any negative impact on future iron ore imports from Australia.
We believe the adjustment is based on normal market rules and facts. If China wanted to start a trade war with Australia, it wouldn’t use a measure of this degree. China has the power to hurt the Aussie economy but won’t fire the first shot in a trade war.
In view of past experience, China won’t be the one to take the first provocative step, but it should be noted that any further attempt to confuse malicious COVID-19 inquiries with trade would only exacerbate the tensions, driving bilateral trade off track.
China has already made it clear that it supports the comprehensive review of the COVID-19 response, which should be conducted in an objective and impartial manner. A resolution on identifying the zoonotic source of the coronavirus has been agreed by all the member states, including China, at the 73rd World Health Assembly (WHA) meeting on Tuesday. The resolution is entirely different from the “independent inquiry” previously backed by some Australian politicians.