US a big winner of China-Australia trade war

American exporters are emerging as winners from the China-Australian trade war. US goods filling market openings caused by Beijing’s punitive tariffs on Australian goods

Statistics from the Chinese Commerce Ministry, General Administration of Customs of China and trade associations in Australia all show deep dives in the value of Australian exports to China in recent months. 

Australian exporters have been ensnared in a wider geopolitical feud over everything from Huawei’s reputed security risks to the pandemic to alleged foreign interference in local politics. Beijing has taken particular umbrage to Australia’s call for an independent investigation into Covid-19’s origins.

At the same time, American exports ranging from wine, beef, cotton, timber to coal have seen their market share in China grow since last year. US producers are filling the void left by the China-Australia trade row. Beijing has also pledged to buy more from the US as part of its first-stage deal to ease trade tensions with the US. 

Winemakers in Australia who compete with American producers worldwide for market share are particularly being hung out to dry. They exported wines worth a paltry A$12 million (US$9.1 million) to China between December 2020 and this March, representing just 4% of the amount shipped in the same period a year ago.

Chinese tariffs as high as 218.4% on Australian wines have slowed shipments to its usual largest overseas market to a trickle, according to the Australian government’s Wine Australia portal. 

Dramatic changes in the past 12 months

Australian wines used to enjoy zero-duty treatment under a free trade pact between Beijing and Canberra ratified in 2015. Canberra is now seeking redress from the World Trade Organization as it contests Beijing’s sanctions against its wines and other exports.  

Meanwhile, Australian barley and other agricultural products face tariffs of up to 80.5%, after Beijing concluded in May 2020 that China’s annual import of A$2 billion worth of such cereal grain from Australia as animal fodder and beer and beverage ingredient put Chinese farmers at a disadvantage due to Canberra’s supposed “rampant trade subsidies.”

China Customs data also show the nation’s meat imports from Australia dropped 8.5% in the first four months of this while Xinhua said China had stopped importing live lobsters since October as a precaution against “food safety risks.”

Recent price surges of iron ore, which represents the bulk of Australia’s exports to China, have helped to offset slumps across other categories and pushed the total value of exports to China in May up 55.4% to US$13.6 billion. 

American barley has become the new favorite of Chinese brewers and fodder producers after Beijing opened the door for more US agricultural products in May 2020. In March, the US Department of Agriculture also hailed a new monthly high in beef exports to China, hitting 14,552 tons.

The final quarter of 2020 was also a blowout season for American coal exporters when Chinese power plants were told to boycott Australian mined coal and tap other nations’ supplies.

Not just agriculture is hit

A power shortage at the time caused China’s imports of American coking and thermal coal to soar more than sevenfold over the previous quarter. The momentum lasted well into the first quarter of this year, with monthly average imports hovering at around 280,000 tons, according to Xinhua which cited data from China Customs. 

Altogether China imported US$73.59 billion worth of goods from the US in the first five months of 2021, up a whopping 59.8%. Australia’s corresponding total stood at US$62.37 billion, up 33.3%, the latest data from the General Administration of Customs show. 

Xinhua and state broadcaster China Central Television have suggested in recent op-eds and current affairs programs that Beijing should leverage its purchasing power to drive a wedge between Canberra and Washington as Australian businesses and politicians complain about US exporters exploiting their woes and undercutting their markets in China. 

Scramble for Africa? America and China proxy war


Tom Fowdy

is a British writer and analyst of politics and international relations with a primary focus on East Asia.


A new scramble for Africa? Events in Ethiopia show how America and China are fighting a proxy war for influence on the continent

Washington has long viewed the country as a crucial partner in a key region. However, the new sanctions it’s just imposed on the Addis Ababa government could backfire and push it closer to Beijing.

It’s been a weekend of extraordinary developments in Washington’s relationship with Ethiopia.

On Saturday, the US International Development Finance Corporation (DFC) secured a contract with a consortium of companies to fund the country’s 5G network. However, it is on the condition the money isn’t used on Chinese telecoms giants Huawei and ZTE. 

Then the very next day, the State Department imposed sweeping sanctions over Ethiopia’s government and army. As well as cutting international aid, over what it deems as human rights abuses in the Tigray region, where Addis has been fighting a conflict with a rebel regional government. Bloomberg reports that these sanctions may broaden to include blocking IMF and World Bank lending to the country.

The sanctions represent a potential turning point in US-Ethiopian relations. These have soured since the bloody Tigray conflict erupted last November. Thousands have been killed and about two million people forced from their homes. There are widespread reports of atrocities, ethnic violence, and alleged war crimes committed against civilian populations.

Washington has long viewed Ethiopia as a critical partner in East Africa. Because of fearing that any destabilization in the region could help Islamic militant groups such as Al-Qaeda and al Shabaab, stoke ethnic tensions, and threaten freedom of movement in the Red Sea

How can one make sense of Washington’s contradictory moves toward the country? President Biden has obviously been under some pressure from Congress to act on the civil war. However, the situation is neatly illustrated by one word: China. 

Simultaneously using sanctions and debt

The US wants to make inroads into Africa to thwart and compete with Beijing’s cozy relationships with many countries on that continent. Washington sees its foreign policy there through the lens of this rivalry. When US Secretary of State Antony Blinken spoke with leaders of Nigeria and Kenya recently, he warned African nations to be wary of Beijing.

To try to assert strategic dominance, Washington is turning to its classic modus operandi of simultaneously using sanctions as leverage in order to influence Ethiopia’s foreign policy, while using debt as a means to procure political moves in its favor and to strengthen the private sector, particularly against Beijing. 

The DFC, America’s development bank, is one to watch. Established in 2019, it is an arm of the US government created to try to rival China’s Belt and Road initiative (BRI) in investing in developing countries. It has a more explicit political and ideological angle to it than Beijing’s program. It demands compliance with American strategic preferences in exchange for low interest loans.Also, it forces privatizations to the benefit of US firms. 

The BRI utilizes state owned companies to build projects, whilst the DFC pushes the American private sector. As an example, at the beginning of the year the DFC brokered a deal with the neoliberal government in Ecuador: offering to pay off its debt to China in exchange for signing up to the ‘Clean Network’ initiative (which excludes Huawei and ZTE from the country’s 5G network) and privatizing Ecuadorian oil companies to American investors. 

This partially reflects the pattern of lending brokered by Bretton Woods institutions in the 1980s, such as the International Monetary Fund and the World Bank, which also leveraged neoliberal economic changes in the 1980s that weakened national economies in Africa but empowered foreign investors in the West. 

Washington accusing China of doing the very things that they do it themselves

It is an interesting contrast, and perhaps an ironic one, from what the US has claimed is “debt trap diplomacy” or “predatory lending” by China. Yet Washington uses conditional loans and sanctions simultaneously with Ethiopia. In a blatant attempt to secure growing leverage over the country. For example, sanctions relief may in time be brokered in exchange for compliance with anti-China objectives, something America has had little luck with in Africa, where many countries have long orientated themselves toward Beijing, not only due to it being a source of easy capital, but because of China’s principle of non-interference. 

This, of course, sets out some of the obstacles ahead for the US in Ethiopia. The sanctions it has imposed will not please Ethiopian Prime Minister Abiy Ahmed’s government. With its army sanctioned, which countries is Ethiopia going to turn to for arms? And which ones likewise support the idea of “sovereignty”? 

The answers are, of course, China and, to a lesser extent, Russia. This may mean while Ethiopia and other countries can leverage US investment, it may come at an unacceptably high price if it comes with political interference. However, it may also provide a tool for African countries to negotiate more squarely than Beijing. This is a deal the Chinese will watch closely. They will certainly be concerned about America making new inroads on the African continent.

In this case, foreign policymakers may dub these new developments a new “scramble for Africa”. That comes with the baggage of denying the agency of African nations themselves in the bid between superpowers to compete for influence. 

Time will tell which superpower will emerge victorious

Either way though, the US has set out a clear strategy on Ethiopia. Weaken the state (one that is often most favorable to China), strengthen the private sector and subsequently use sanctions to impose its own vision on reshaping this African country. Only time will tell what the results are. And which superpower eventually emerges victorious on the African continent.

Can Australia achieve economic growth without China?

By Stan Grant

China, India, Indonesia, Russia, Brazil: What do these five countries have in common?

They are the future. Our future depends on them. They are not the West.

Collectively, they will account for more than half of all global growth through to 2024, according to figures from the International Monetary Fund. Think again about that: five countries, 50 per cent of growth.

The giant among the five is, of course, China. It has already surpassed the United States as the biggest engine of global economic growth — 28 per cent annually between 2013 and 2018.

By the end of this decade, China is expected to overtake America as the single biggest economy in the world. And of the other four countries — Brazil, Russia, Indonesia, India — each lists China as its biggest trading partner.

The IMF says there is no way the global economy can grow unless these countries also grow. Yet in this week’s budget, did we hear mention of any of them?

No. We did not even hear mention of China. Incredible, given China is Australia’s biggest trading partner, too.

How is Australia handling this hinge point of history?

Australia’s trade with China dwarfs its trade with any other country: more than $90 billion, an enormous 43 per cent of all our exports. For comparison, the next biggest market is Japan, at $19 billion.

Trade is equivalent to 45 per cent of Australian GDP and one in every five jobs in the country.

Treasurer Josh Frydenberg has said this budget is about stimulating, spending and creating jobs. How do we seriously achieve that when our political leaders cannot speak to their counterparts in Beijing? 

In the meantime, we hear increasing talk of the “drumbeats of war”. How can we achieve economic growth and boost jobs when the Treasurer, in his budget speech, cannot mention China by name and instead makes allusions about a more dangerous world (read: China threat) and commits to ever more spending on our military?

This isn’t to deny that we live in a more perilous age or that an authoritarian China does not present a threat — or that we need to keep our defence force ready and equipped for any eventuality. But there are serious questions about how our political leaders are handling this hinge point of history.

China is an indispensable nation; our future depends on it. Our future depends on those other countries that make up half the world’s growth — countries we rarely even talk about.

This is not 1992. We have not just emerged from the Cold War; America is not the predominant or sole power in the world; this is not the end of history. We can no longer say, as Western political leaders did then, that China is on the wrong side of history.

The world is turning, history is turning

In its report The World in 2050, international professional services company PwC lists what will be the top 10 economies in the world:

1.China

2.India

3.US

4.Indonesia

5.Brazil

6.Russia

7.Mexico

8.Japan

9.Germany

10.UK

Where did the West go? The report says simply: today’s developing markets will be tomorrow’s economic superpowers.

Outside of the top 10, Vietnam, the Philippines and Nigeria will be the biggest movers in the rankings.

The report compares the E7 (emerging economies) with the G7. In 1995, the E7 were half the size of the G7; by 2015, the E7 had drawn level; by 2040, the E7 could be double the size of the G7.

A Rip Van Winkle “go to sleep and dream away the future” approach won’t work.

The West has been battered by war, growing inequality, stagnant wages, terrorism, economic collapse, declining democracy and rising political populism.

America — the so-called leader of the free world — is a country damaged by unending crisis.

President Joe Biden talks a good game about “America is back” and rebuilding alliances. But how does America lead a world where economic power has so dramatically shifted?

Betting against America

In his recent speech to Congress to mark the first 100 days of his presidency, Joe Biden said it was never a good idea to bet against America. But that’s precisely what many countries are doing.

China’s massive Belt and Road Initiative — one of the largest infrastructure and investment projects in history, covering 70 countries, 65 per cent of the world’s population and 40 per cent of gross domestic product — is a bet against America.

It is part of Xi’s China Dream of a rejuvenated nation, returned to the apex of global power.

Australia is caught in the crosshairs of this global historical turn. We are still a European outpost in Asia, a country with historical ties to Britain and all in with the US. 

It has served us well, but that world is passing. The geopolitical, economic and military plates are shifting as the world walks ever more treacherous fault lines.

But this isn’t the discussion we have been having post-budget.

Instead, we are talking about debt and deficit and vaccine rollout and possible election dates. Journalists are engaging in the usual round of predictable “gotcha” questions, and politicians are looking to score tit-for-tat political points.

All around us, the world we knew is giving way to the world we don’t truly understand, let alone are truly equipped for.

China, our biggest trading partner, is now a global Voldemort — he who cannot be named.

But call it what we will — or won’t — China looms over our world and it is dragging those other emerging economic giants along with it.

To stay with the movie analogy, for the West, there is no back to the future.


Source: ABC

EU trade chief proposes mutual tariff freeze to Washington

Brussels suggested the EU and its major overseas partner suspend tariffs imposed on billions of dollars of imports for six months, EU trade chief Valdis Dombrovskis told Germany’s main news platform, Der Spiegel.

The measure would go beyond the latest four-month suspension of import duties that the parties agreed in March.

“We have proposed suspending all mutual tariffs for six months in order to reach a negotiated solution. This would create a necessary breathing space for industries and workers on both sides of the Atlantic,” Dombrovskis said.

Last month, the two transatlantic partners agreed to suspend mutual tariffs that had covered $7.5 billion of EU imports of American goods and some $4 billion of US products shipped to the bloc. The freeze is set to expire in four months.

The bitter EU-US trade dispute over aerospace subsidies to plane makers Airbus and Boeing dates back to 2004. Then Washington challenged European subsidies of Airbus that reportedly had “adverse effects” on the US.

The EU filed a retaliatory complaint against the direct support given to Boeing in the form of regional tax breaks and government grants.

So far, tit-for-tat duties on various goods have affected nearly $50 billion in mutual trade. The list of EU products on which the US imposed taxes came in at $25 billion. $7.5 billion was authorized by the World Trade Organization (WTO). In comparison, the EU’s list totaled a mere $20 billion. WTO approved $3.99 billion.


US axes Trump-era Scotch whisky tariffs for four months in bid to resolve aircraft trade war with UK

The US said on Thursday it will suspend 25 percent tariffs on Scotch whisky and retaliatory import taxes on other UK products in a bid to resolve the two parties’ on-going transatlantic trade row due to aircraft subsidies.

Then-US President Donald Trump slapped the UK and other EU member states with tariffs on whisky, wine, cheese and other foodstuffs in 2019 in return for European plane maker Airbus being given illegal subsidies by the bloc. 

The World Trade Organization (WTO) ruled in 2018 that EU governments had failed to comply with US requests to stop funding Airbus, which had caused its American rival Boeing to lose $7.5 billion a year.

Airbus had already filed a similar complaint with the WTO against Boeing in a dispute between the two manufacturers stretching back to 2004.

On Thursday the US and the UK said in a joint statement that “the United States will now suspend retaliatory tariffs in the Airbus dispute from March 4, 2021, for four months.”

The move is the latest of Trump’s policies to be overturned by President Joe Biden, whose administration will now turn its focus toward rising civil aviation powers “such as China,” the statement says.

Reacting to the news, UK Prime Minister Boris Johnson hailed the tariff climbdown as “fantastic news” for the transatlantic trading relationship, as well as for Scotch whisky distillers and other businesses.

In December the UK International Trade Secretary Liz Truss announced Britain would suspend retaliatory tariffs against the US, ahead of Brexit and the expected new trading relationship with the US under Biden.

As well as whisky, Trump’s original tariffs in response to the WTO ruling targeted UK cashmere, German coffee and tools, Spanish olive oil, as well as cheese, meat and other products from various EU nations.

Akademik Chersky headed for Nord Stream 2

The Akademik Chersky pipe-layer headed towards Nord Stream 2. The Danish Energy Agency has reported, citing the operator’s schedule, that the vessel plans to begin completing the second string of the gas pipeline in Danish waters at the end of March

The pipe-layer Akademik Chersky left the area of ​​the Curonian Spit near Kaliningrad and headed towards Nord Stream 2. According to the Vesselfinder navigation portal, this afternoon, March 30, the vessel left the area where it was undergoing sea and pre-operational tests. It went along the route that it had previously taken to Germany.

Illustration: vesselfinder.com.
Illustration: vesselfinder.com.

The supply vessels Vengery and Ivan Sidorenko left the Curonian Spit before the pipe-layer in the direction of Nord Stream 2. “Akademik Chersky” has indicated since March 4 that he is at work at sea. Therefore, the exact direction of movement is unknown.

Also, something else is known. The Danish Energy Agency reported that completion of the second string of Nord Stream 2 in Danish waters will begin in March.

“I can confirm that we have received an updated timetable from Nord Stream AG 2 for branch A. It says that work on the pipeline will begin this month”. It is reported EADaily head of the press service of the Danish Energy Agency (DEA) Tour Falbi-Hansen .

Branch A contains the longest unfinished section of Nord Stream 2. 68.5 kilometers in Danish waters and 16.5 kilometers in German waters. Earlier, in early March, the ship left the German port of Wismar and arrived at the Curonian Spit near Kaliningrad. Operator Nord Stream 2 AG announced that the pipe-layer will undergo sea trials and pre-operational tests and begin work in Danish waters.

Meanwhile, as reported by EADaily , the barge Fortuna has already covered half – 24.5 km – of the unfinished section of Line B in Danish waters.

In February, the Danish Maritime Office clarified in a warning to seamen that work on Nord Stream 2 (the second string) is planned to be carried out by the end of September and the pipelayer Akademik Chersky will participate in them.

USA continue pressure with illegal sanctions

The Akademik Chersky is a more technically suitable vessel for Nord Stream 2 and can lay up to two kilometers per day after retrofitting. Therefore, obviously, the deadline for completing the completion of branch A in Danish waters was taken with a gap, and the pipe-layer will be able to complete it at the same time as “Fortuna” – at the end of May – June. In this case, Nord Stream 2 may be ready to launch by autumn.

Recall that the United States has imposed sanctions against the vessels of the project and the vessels of Russian companies are used on it. In addition, Washington has banned companies involved in the retrofitting of ships, insurance, inspection, testing and certification of gas pipelines from participating in Nord Stream 2. It is not known whether Gazprom solved this problem. German media reported that Washington offered Berlin conditions under which it would not impose sanctions on project participants. 

Among them are guarantees that the gas pipeline will be cut off if Gazprom stops Ukrainian transit; an increase in Russian gas supplies through Ukraine; and investment in Ukrainian infrastructure for the production and transportation of hydrogen.

The EU wants to impose carbon tariffs on Australian exports

What Australian politicians call carbon tariffs, the European Union labels a carbon border adjustment mechanism.

While one sounds bad (the WTO has rules that restrict tariffs) the other sounds understandable. If the EU is imposing a carbon tax on its own products, surely it is reasonable to impose it on products from overseas.

The argument is that if a German steel manufacturer has to pay a tax of, say, $77 a tonne for the carbon it emits while making the steel, an Australian manufacturer should be charged the same when its product enters the country, unless it has already paid the same tax here.

To do otherwise would give the Australian product an unfair price advantage — it would create “carbon leakage” of the kind Australian businesses used to warn about in the leadup to Australia’s carbon price.

The European Union approved the idea in principle on March 10.

The details are less than clear. In part because it is possible that carbon tariffs are not permitted under the rules of the WTO.

WTO rules might help Australia…

The rules say taxes or “charges of any kind” can only be imposed on imported products the same way as they are domestically.

That appears to mean that they can be imposed on importers but not on producers. However it isn’t quite what the European Union has in mind.

Ideally the WTO would be able to provide guidance. However, (in part because of the actions of the US Trump administration) it isn’t really in a position to do.

…if only they were enforceable

The WTO has a new director general in Ngozi Okonjo-Iweala. He took office this month. However it will remain unable to make rulings for as long as its appellate body is unable to hear disputes.

Under Trump, the US kept vetoing appointments to the appellate body until the expiration of terms of its existing members meant it no longer had a quorum.

Disputes can still be initiated by countries such as Australia, forcing consultations. But without final determinations.

EU says it wants to ensure that its adjustment mechanism complies with the WTO’s rules. However, it hasn’t ruled out the possibility of relying on provisions that allow exceptions.

Both sides could make a case

Exceptions are allowed for the protection of human, animal or plant life or health or the protection of an exhaustible natural resource.

The catch is these exceptions are not allowed to discriminate between countries and must not be disguised restrictions on trade.

It is arguable that an adjustment mechanism designed to protect the competitiveness of European industries will breach these provisions.

Russia looks to replace Australian coal exports to China

Russia’s coal miners could boost exports to China. Beijing slapped tariffs on Australian imports amid a growing trade rift.

Chinese authorities completely halted supplies of coal from Australia in late 2020. Triggered by Canberra voiced its support for an international inquiry into China’s handling of the coronavirus crisis.

However, China’s appetite for energy imports steadily increasing. Russia is looking to fill the void by boosting coal exports to its neighbor.

“As imports of coal from Australia to China are expected to decline, Russia has a chance to replace at least part of it with its own coal,” said TS Lombard analyst Madina Khrustaleva, as quoted by SCMP, a Hong Kong-based English-language news outlet.

The expert noted that Russia has several large coal deposits ready to begin supplying China. Transport being the only hurdle.

Mutual trade between Russia and China has been growing since 2014, and China has since become Russia’s biggest trade partner.

Russia is in pole position to substitute imports from Australia

“Russia is clearly in pole position to substitute imports from Australia. The increase in oil prices is also helping Russia. All in all there are really tailwinds for Russia,” Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, told the media.

Over the past year, a political rift between China and Australia has spilled over into the economic world. Chinese authorities applied import duties on a wide range of Australian produce, including wine, lobster, meat, barley, timber, and coal. Canberra hit back with tariffs on Chinese aluminum, paper, and steel.

Last week, Russian President Vladimir Putin called for boosting coal exports to Asia by at least 30 percent over the next three years. Putin also approved financing for expanding the country’s rail routes for transporting coal to the continent from the Kuzbass region, Russia’s key mining area.

Russia has invested in modernizing the Baikal-Amur and Trans-Siberian railway networks, the nation’s key rail routes. The expert also said that Russian coal companies are developing joint ventures with Chinese firms to boost coal trade.

In December, Elgaugol, the company behind the Elga coal project in the Russian Far East, agreed to launch a joint venture with China’s Fujian Guohang Ocean Shipping Group that will export metallurgical coal to China. The Elga project aims to ship 30 million tons of coal to China in 2023, almost doubling Russia’s total coal exports to China, which stood at around 33 million tons in 2019.


Here is the view from Australia by ABC News (Australian Public Broadcast Service)