In a significant escalation of tensions, China has ordered merchants to stop purchasing at least seven categories of Australian commodities including wine starting from this Friday, according to a leaked memo.
These Australian goods include coal, barley, copper ore and concentrate, sugar, timber, wine and lobster, according to messages circulated among people familiar with the matter inside mainland China.
The memo was passed to by Vino Joy News by a major wine importer inside mainland China. The message which appears to be a meeting memo from the country’s Ministry of Commerce. It instructed merchants to stop importing the seven categories of goods starting from November 6 and all contracts signed before the cut-off date should be suspended.
Reasoning for the suspension and barring as the memo specifically instructs is “for commercial purpose”, as opposed to political retaliation.
For goods arrived before November 6, it says they will generally be released from the arriving ports, and those arriving after this Friday will be stranded, according to the meeting directive.
It warns importers and merchants to “be consistent in suspending trade with Australian companies (commercial purpose). Follow national discipline and avoid playing cabian qiu (不能打擦边球)”, referring to the ping-pong technique of hitting a ball right on the edge.
Further explaining it, it says “transit to other countries to bypass Australia to China won’t be tolerated. Country of origin is the key.”
The authenticity of the memo is confirmed in the latest Bloomberg report.
This is a major escalation that could upend Australian wine sales in China, its biggest export market, completely which values over AU$1.2 billion.
The directive if proven to be authentic, is a much harsher retaliation than previously expected by wine merchants inside China, where majority were expecting a tariff hike following twin investigations of dumping and subsidy allegations.
China and Australia’s relations this year sank to the lowest level in history due to coronavirus inquiry. China has already barred Australian beef imports from four companies, slapped 80% tariff on Australian barley and earlier in August threated to levy over 200% tariff on Australian wines.
China is Australia’s biggest wine market, and Australian wine takes up roughly 40% of market share in the country, the biggest wine category by far, ahead of France and Chile.