- According to Reuters on Friday, China has instructed cotton mills to stop buying Australian cotton
- Australian government sources also said that if Chinese cotton factories continue to buy cotton from Australia, they may face 40% tariffs
- China-Australia diplomatic relations have rapidly cooled over the past year.
Following reports that China has suspended imports of Australian coal a few days ago, there is now news that China requires cotton mills to stop buying Australian cotton. Reuters reported that this is the latest manifestation of the deterioration of relations between the two countries.
According to Reuters on Friday, citing an Australian government insider and two Chinese cotton traders, China has instructed cotton mills to stop buying Australian cotton.
Australian government sources also said that if Chinese cotton factories continue to buy cotton from Australia, they may face 40% tariffs.
“The millers essentially get a quota they can import, and essentially they’re being told they might not get their quota next year if they buy our cotton,” an Australian government source told Reuters.
“Impeding the ability of producers to compete on a level playing field could constitute a potential breach of China’s international undertakings, which would be taken very seriously by Australia.”
In an email sent to Reuters, Australian Minister of Commerce Simon Birmingham stated that the Australian government is aware of China’s adjustments to cotton purchase policies and has warned China not to adopt policies to suppress trade.
He stated that Australia will take such possibilities seriously. “Restricting a fair playing field constitutes a violation of China’s international commitments.” He added, “China should rule out any use of discriminatory actions against Australian cotton producers.”
China is the largest buyer of high-quality Australian cotton. In 2018/19, the trade volume reached approximately 900 million Australian dollars (equivalent to $637 million). Customs data shows that China imported about 400,000 tons of Australian cotton in 2019.
“Impeding the ability of producers to compete on a level playing field could constitute a potential breach of China’s international undertakings, which would be taken very seriously by Australia,” he said.
Just this week, news came out that China had ordered a suspension of imports of Australian coal. The Australian government is currently investigating this.
For a period of time, due to a series of incidents such as the introduction of the Anti-Foreign Intervention Act and the prohibition of Huawei from participating in 5G construction, China-Australia diplomatic relations have rapidly cooled.
Earlier this year Australia called for an independent investigation into the origin of the new coronavirus that first appeared in China, further angering the Beijing government.
“It has become clear to our industry that the National Development Reform Commission in China has recently been discouraging their country’s spinning mills from using Australian cotton,” Cotton Australia CEO Adam Kay and Australian Cotton Shippers Association chair Michael O’Reilly said in a joint statement on Friday.
In May of this year, China imposed a total of 80.5% of anti-dumping and countervailing duties on Australian barley, which is actually equivalent to suspending $1 billion in trade. On Tuesday, China stated that it has launched an anti-dumping investigation on Australian wine imports.
“About 65 percent of our crop goes to China, so they’re very important to us and we’ve built that relationship up,” Mr. Kay said.
“For us, the disappointing thing is those great relationships that we’ve worked hard on to build up. Even in the 1970s our leading farmers went over and helped the Chinese people with their cotton production and helped them get their industry going.”