Beijing Drops Trade Sanctions on Australian Beef

Australian beef is seen at a supermarket in Beijing on May 12, 2020 Greg Baker/AFP via Getty Images

Beijing has lifted an arbitrary ban on three Australian abattoirs as China not only grapples with food shortages, but continues working to ease relations with the Labor government.

Beijing’s Customs Agency announced that products from Australian companies Teys, the Australian Lamb Company, and JBS will be allowed into China.

The initial ban came amid a flurry of coercive trade actions in 2020 targeting Australian exporters in response to the former Morrison government calling for an international inquiry into the origins of COVID-19.

The ban swept a swathe of exports to China including wine, beef, barley, and lobster with the sanctions estimated to cost Australian companies $20 billion (US$13 billion).

Yet at the same time, it spurred democratic governments to begin adopting “trade diversification” strategies to reduce their reliance on the Chinese market to reduce the risk of pressure from the Chinese Communist Party (CCP).

Trade Minister Positive for Further Progress

In response to the dropping of the beef ban on three abattoirs, Trade Minister Don Farrell said it was another “positive step” towards stabilising ties with Beijing.

“The Albanese government will keep pressing for the remaining trade impediments to be removed as soon as possible,” he said in a statement.

In August, Beijing removed its ban on Australian barley with 314,000 tonnes of the products already imported into China, according to the trade minister’s website.

“This is the first time in over three years that Chinese authorities have released official data showing that Australian barley has returned to China,” it said.

Further, the government noted that Beijing had lifted its bans on other exports including barley, coal, cotton, copper ore, timber logs, stone fruit, and oaten hay.

Before 2020, barley exports were worth $916 million to the Australian economy.

“Trade relations with China are on a positive trajectory thanks to this government’s mature approach to international relations,” the trade minister said.

The Labor government has touted its approach to international relations as a key point of difference from the previous Liberal-National government, which openly criticised Beijing for its human rights abuses and breaches of international norms.

“I look forward to the removal of import duties on Australian wine following the completion of a review by China; and I will continue to press for the re-entry into China of Australian live lobster and red meat,” Mr. Farrell said.

Currently, Beijing is reviewing its ban on Australian wine exports, while seven other abattoirs remain blocked from re-entering China, including Australian Country Choice, Kilcoy Pastoral, Beef City, JBS Dinmore, Northern Cooperative Meat Company, John Dee, and Meramist.

Chinese Farmers Struggle to Feed the Country

The dropping of tariffs comes as the Beijing leadership grapples with ongoing food shortages, with China now one of the largest global purchasers of soybean, corn, wheat, rice, beef, pork, barley, and sorghum, according to an August S&P Global update.

Part of the reason behind China’s struggles to feed itself is that farming is simply not a lucrative activity in the country after generations of communist and socialist control.

A combination of corruption—with arbitrary taxes imposed on farmers from local-level officials—and socialist policies, that result in government control over farmland, have resulted in very poor profit margins for operators, and very little appeal for younger generations to take up the practice.

In contrast, free-market systems in Western countries allow farmers to operate larger lots of land with minimal government control, and to also profit from their businesses—making farming businesses appealing for several generations.