China continues its onslaught as it targets the wine industry
Treasury Wine Estate (ASX: TWE) shares slid approximately 15%.
China has launched an anti-dumping investigation into Australian wine exports, arguably the thin edge of the wedge for the imposition of further tariffs on our agricultural sector.
This comes hot on the heels of trade sanctions related to Australia’s beef and barley exports.
These initiatives by the Chinese government appear to have more to do with the Australian government calling for an independent enquiry into the COVID-19 pandemic, the decision to lock the Chinese telco Huawei out of Australia's 5G network, criticisms surrounding intensifying cyber-attacks emanating from China, Beijing’s militarisation of the South China Sea and the imposition of its dictatorial laws on Hong Kong.
China's ambassador to Australia, Cheng Jingye, publicly warned the Australian government that Chinese consumers might boycott our goods because of the decision to pursue a COVID enquiry, but this isolated reference had more to do with broader relations between the two countries.
Ironically, the latest dumping claims come from a country that has on numerous occasions been found guilty of dumping the likes of cement and steel in our own backyard.
During the first wave of coronavirus our supermarket shelves were stripped of essentials that were located in warehouses en-route to China.
In similar fashion, Australia’s baby formula is regularly hijacked for sale in China at the expense of our consumers.
Treasury Wine Estate the latest casualty
Despite the do as we say, not as we do China diplomacy, it does little to assist the likes of Treasury Wine Estate (ASX: TWE) with its shares sliding approximately 15% yesterday when the wine dumping investigation was announced.
Ironically, it is China that contributes towards price inflation in our food and beverages both in Australia and overseas because it is such a large importer of our goods.
The country’s consumers value our clean, green reputation, and in the business community it is very much a ‘wanna be seen’ mentality as they wine and dine on Penfolds Grange Hermitage, lobsters, abalone, wild caught barramundi and wagyu beef.
But in the last few months the world’s largest Communist power with a heavy appetite for the trimmings that come with capitalism has been dining on Australian exporters, and the whining is more likely to escalate rather than dissipate.
Author: Trevor Hoey
Aug 19, 2020
Former senior writer for AFR, Trevor Hoey provides incisive commentary on ASX developments, particularly focusing on the emerging companies market segment.