In the escalating falling-out between the two countries, China’s catastrophic tariffs on Australian wine exports is a ruinous impost on the $1.2 billion fast-growth market.
But the symbolic destruction of an Australian export trade is not without risk to China.
While it can happily survive without our coal, barley, lobsters and wine, it flies in the face of its “dual circulation” strategy. Chinese leaders claim to want a “wider, broader and deeper” economic opening to the world and do not want to decouple to pursue pure self-sufficiency.
But a partner that willingly uses trade to attempt to leverage political advantage outside the control of the supplier brings new risks to export equations.
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The targeted sanctions are being noticed by exporters around the world who must now recalibrate decisions about how much to rely on the vast but unpredictable Chinese market.
The White House under Donald Trump has signalled a possible informal alliance of Western nations to respond collectively when China attempts trade coercion. It’s unclear if the Biden administration will pursue this.
Around the Western world people are now choosing to offer a mild rebuke to China by buying Australian wine. Significantly the White House noted in a press release it would be serving and enjoying it.
In the meantime, Chinese decision makers won’t pick up the phone to Australian ministers, but if they did little would change. There’s a bigger picture.
Empires ebb and flow. Over the past millennia various empires have taken the rudder: Macedonians, Carthaginians, Romans, Mongolians, Arabs and Persians, Franks, the Holy Roman Empire, Mongolians again, Ottoman Turks, the Spanish, Dutch, Portuguese, French, British and, currently, Americans.
The West has been in evident decline relative to the East for some time. Much of Europe is losing significance and slowly becoming a museum, and the United States, while still dominant, is very wobbly.
A baton change from the US to China is far from inevitable, for the Chinese Communist Party (CCP) has problems of its own. It has an unspoken compact with citizens that it will increase their wellbeing in exchange for power. This has led to almost half of their citizens being lifted from poverty in a handful of decades, one of the great achievements of humankind.
But real GDP has matured, peaked and is slowing, and will for the next few years. COVID-19 hit hard and with no Western-style personal stimulus programs consumption is down.
Furthermore, with real or undelivered expectations of greater economic security comes greater desire for self-determination by the citizenry, and the potential for conflict with the authoritarian instincts of a centralised government. The CCP is riding a tiger.
Two issues of substance are concerning. First, the collapse of empires is usually bookended by wars — caused by the friction between old expectations and new realities, and the extent to which each side is prepared to enforce their desires. We must hope we are wise enough to avoid this danger, and recognise that politicians start wars but populations suffer them.
The West must differentiate between the Chinese people and the Chinese Communist Party and not allow our inner cab drivers to emerge.
Second is the tussle for dominant ideology. China’s authoritarianism is fundamentally different from US values. There may be ugly years ahead.
In the meantime, the Australian wine industry has become a casualty in a skirmish it can’t hope to control. If you want to help, go home straight away and open a very good bottle of local plonk.
Toby Ralph is a global marketing consultant who has worked for the Liberal Party in Australia and on elections around the world.