Australian manufactures dodge China trade woes – mostly

Since Beijing moved to curtail Australian exports to China in May last year – not of course our coking coal and iron ore on which China depends – manufactured exports have mostly managed to avoid much of the pain.

In the three categories – wine, meat and copper – that are manufactured or substantially transformed manufactures (STMs), only wine appears to have been seriously hit, according to a study by UTS, Sydney academics James Laurenceson and Thomas Pantle.

In beef, while export volumes have since declined to China, this was in line with declines to other markets.

“This strongly suggests that an important factor behind the decline in volume to the PRC was not only the trade disruption initiated by Beijing, but also reduced Australian supply.”

In copper, exports to China have fallen by 236,267 tonnes, whereas exports to the rest of the world rose 256,430 tonnes.

“It is therefore assumed that all of the volume that was previously exported to the PRC was successfully diverted elsewhere.”

The story with wine is different with the researchers finding no evidence of wine being diverted from China to other markets.

“Australian wine exporters have incurred large costs as a result of vastly reduced access to the PRC market.

“This most directly reflects the differentiated nature of of wine with a high unit-price.”

An indicator of this is that Australian wine exports were affected in wine category 220421, but there has been no subsequent rise in Australian exports in code 220429.

Code 220429 is wine in containers of two litres or more – so we did not simply put Grange in bigger containers to get around the tariff.

Interestingly the study shows how Chinese businesses have themselves circumvented the tariffs.

Australian lobster export falls to mainland China were almost completely made up by a one million kilogram plus rise in exports to Hong Kong.

There the lobsters have been making it across the border into China – and selling for as much as $340 a kilogram.

Picture: Wine Australia

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