China’s renewed threat of trade sanctions against Canadian canola, following Ottawa’s tariffs on its electric vehicles, marks the latest instance of an apparent retaliatory tactic by Beijing.
A glance at some recent examples shows that several countries targeted by the communist regime’s retaliatory bans managed to withstand them by diversifying into other markets. Australia redirected its barley exports after China imposed duties in 2020 that effectively blocked exports to that market. Taiwan marketed its pineapples to new buyers following China’s 2021 restrictions.
Canada, too, has diversified its markets since China last sanctioned its canola in 2019, in what was regarded as retaliation over Ottawa’s arrest of Huawei executive Meng Wanzhou. The three-year ban cost Canada an estimated $1.54 billion to $2.35 billion, says the Canola Council of Canada. In response to the restrictions, Canada redirected canola seed to other major markets like Europe, Japan, and Mexico, which helped rebalance its total exports, the council said.
Here’s a look at how other countries weathered China’s trade restrictions through diversification.
Trade Spat With Australia
China imposed restrictions on various Australian products starting in 2020 following a series of political disputes. These included Canberra’s call for an international investigation into the origins of COVID-19 and its rejection of Beijing’s claims over the South China Sea. Additionally, Australia’s 2018 decision to ban Huawei from the country’s 5G network over security concerns contributed to the tensions.Beijing admitted to retaliating against Australia with a trade war, implementing tariffs and suspensions targeting Australian coal, beef, wine, barley, lobster, timber, lamb, and cotton exports. While exporters in these sectors suffered significant losses, many diversified into other markets.
“These explicit restrictions have not had a material impact on the forecasts for real GDP,” a 2021 Australian Treasury Department report stated. “Given global demand, we expect most Australian exports can generally be diverted, though sometimes at a discount.”
The report noted that China’s ban on Australian coal led to an export decrease of 7.8 percent in the 2020–21 third quarter ending March 2021. However, Australia diverted its coal to other markets like India, Japan, and South Korea. China eased its coal ban 2 1/2 years later, allowing some state-own companies to import Australian coal in early 2023.
For barley, China was Australia’s largest market prior to the ban, accounting for more than half of its exports from 2017–18 to 2019–20, reported the Australian Agriculture Department. After China imposed its ban, Australia found alternative markets including in the Middle East, Southeast and East Asia, Africa, and Latin America.
In August 2023, China removed its 80.5 percent anti-dumping and countervailing duties on Australian barley. This decision followed Australia’s agreement to suspend its World Trade Organization (WTO) dispute against China over the tariffs.
As for Australian wine, China began imposing anti-dumping and countervailing duties in March 2021 that amounted to a nearly 220 percent tariff, and only removed that tax in March 2024. This decision also came after Australia agreed to suspend its WTO wine dispute with China.
Prior to those duties, Australian wine was the top imported wine category in mainland China with a third of the market value in 2020. In fiscal 2019–20, wine exports to mainland China were valued at AU$1.1 billion (C$1 billion), compared to the AU$2.84 billion total value of those exports that year, according to Wine Australia, a federal government corporation.
Following China’s introduction of the duties, data indicated that Australia successfully diversified to other markets for its wine exports, which saw growth in Europe, the UK, and the United States. In fiscal 2022–23, the UK was the top destination by value, representing 19 percent of the AU$1.86 billion total Australian wine exports. The United States closely followed, also with a 19 percent share.
“We will support the Australian wine sector to re-enter the [Chinese] market through a coordinated set of activities and advice on market requirements, while continuing our market diversification efforts in other markets,” Wine Australia said in a March 2024 media statement.
Banning Taiwanese Pineapple and Other Food Exports
China banned imports of pineapples from Taiwan in 2021, citing pest concerns. However, the move was widely viewed as part of Beijing’s ongoing diplomatic and economic pressure on the island, a charge that China denied.Prior to the ban, China was the dominant importer of Taiwanese pineapples, accounting for up to 97 percent of exports in 2020, according to Taiwan’s Agriculture Ministry. Following the ban, this figure dropped to just over 1.7 percent, according to Taiwanese local media reports.
Taiwan sought alternative markets for its fresh pineapples, finding support from various countries including Japan, Canada, and the United States. Notably, the island nation championed the case for rallying behind Taiwanese pineapples by referring to the fruit as “freedom pineapples” and calling on people to support the farmers by eating more pineapples.
“Purchases from China are being replaced with domestic use and orders from Japan, Australia, Singapore, Vietnam, and Middle East countries,” Taiwan’s then-Vice President and current President Lai Ching-te wrote on Twitter in February 2021. “The traveling pineapples are looking forward to their new visas.”
The ban on Taiwanese pineapples was part of China’s broader economic pressure on Taiwan, particularly in response to political or social moves that Beijing viewed as pro-independence. Beijing has made territorial claims over Taiwan, claiming the island as its own. In addition to economic pressure, the regime has repeatedly threatened military action against the island.
Other Taiwanese food and beverage products banned by Beijing in recent years amid heightened cross-strait tensions have included biscuits, candies, alcohol, pork, lychees, and seafood. Taiwanese government statistics in May indicated that Taiwan’s overall exports to China are steadily decreasing as Taiwanese capital and businesses gradually move away from China.
Sanctions Against Lithuania
China has leveraged economic pressure on other countries in order to isolate Taiwan from the international community. Lithuania is one example of a target of this tactic.In November 2021, the northeastern European country allowed Taiwan to open a representative office in its capital Vilnius under the name “Taiwan” instead of the name of the island’s capital, “Taipei,” which is typically used in countries without official diplomatic ties with the island. This de facto embassy and name choice upset Beijing, which viewed it as a move toward solidifying Taiwan’s independence status.
In response, China downgraded diplomatic ties with Lithuania and imposed economic sanctions, blocking imports of Lithuanian products like dairy, beer, and beef from the Chinese market in February 2022.
However, as Lithuania’s trade is primarily focused on the European Union, it further diversified within the bloc after Beijing’s ban.
For example, Lithuania’s dairy exports to China in 2021 were valued at 4.2 million euros, according to U.N. international trade data and data service Trading Economics, compared to the Baltic state’s total dairy exports of 1.02 billion euros (C$1.5 billion) in 2022, according to EU statistical service Eurostat. Sellers were able to find alternative markets, mostly within the EU, reported Dairy Industries International.
Additionally, the Baltic country sought to mitigate risk by accelerating diplomatic and trade diversification efforts in the Indo-Pacific region, enhancing commercial ties with economies there such as Australia, South Korea, and Singapore, according to the U.S. think tank Asia Society Policy Institute.
