Daily Commentary BY THE CURVE TEAM –

Geopolitical Tensions Resume

20th of August, 2020

Hostilities between China and the world have resumed as China imposes tariffs on an Australian export.

Earlier in the year, China imposed tariffs on Australian barley and banned imports from certain Australian abattoirs. Officially it was due to concerns of Australian dumping but reports suggested it was in response to Australia agreeing with an investigation into the Covid-19 outbreak in China.

Yesterday China said they had received accusations of dumping from the Australian wine industry. This is despite Australian wine being the second highest priced in the market. Wine exports to China now face the potential for tariffs before the accusations are resolved.

This follows reports this morning that Treasurer Frydenberg disallowed a Chinese acquisition of a dairy company despite it being approved by the Foreign Investment Review Board.

China makes up the largest portion of our exports it ever has, which is above a third of our total exports. Their economy is also outperforming the world after they contained Covid-19 more effectively than other countries. Therefore, Australia is particularly dependant on China, especially during Covid-19.

Australia’s ongoing relationship will be partially related to America’s relationship with China. The Phase 1 trade deal between China and America is set to end at the end of the year, so talks for a new deal will greatly determine their relationship moving forward.

Josh Stewart

Client Relationship Manager