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China Raises Australian Wool Quota Amid Ongoing Trade Tussles

High-level contact between the two nations has been severed, and the ongoing trade tussle is still affecting wine, barley, lobster, beef, coal and other exports

Australian wool
Traders buy bales of Australian wool at an auction in Yennora, New South Wales. Photo: Reuters.


China has raised the import quota for Australian wool in 2022 from the previous year in a key easing of trade tensions that have dogged relations between the two countries this year.

China set its 2022 import quota for Australian wool at 40,203 tonnes, from 38,288 tonnes a year earlier, according to a statement issued on Wednesday on the website of the Ministry of Commerce.

High-level contact between the two nations has been severed, and the ongoing trade tussle has affected wine, barley, lobster, beef, coal and other exports.

China did not target iron ore and liquefied natural gas imports from Australia in the ongoing trade dispute, as they are essential to the country’s economy.

However, the Evergrande-led property development crisis has returned the spotlight on the looming threat from a structural slowdown in China’s economy.

“Australia’s exports to China are even more vulnerable to the slowdown in the property sector than they were before the trade spat as iron ore has gained in importance,” Marcel Thieliant, Australia economist at Capital Economics, said.

China’s latest Five-Year Plan puts more emphasis on environmental goals. That has already resulted in curbs on steel output even before the recent power rationing.


Tariffs on Australian Products

“We think that China’s steel demand will fall before long and even if it doesn’t, a shift to electric arc furnaces is a big threat to Australian miners,” Thieliant added.

Australia’s exports to China accounted for a record 45% of its total exports by value in the first eight months of the year, largely due to the surge in the price of iron ore.

Iron ore prices have nearly halved in recent months, but shipments of the metal-bearing mineral will probably still account for 70% of total shipments to China over the coming months compared with just over 40% in 2018.

The main reason is China’s continuing ban on imports of Australian food as well as coal, Thieliant said.

In October, Canberra went to the World Trade Organization (WTO) over Chinese tariffs on Australian wine. China lodged its own complaint with the WTO days later.

Now tensions have risen again, with Australia instituting a diplomatic boycott of Beijing’s Winter Olympics.

China grants duty-free treatment to Australian wool up to the quota level, which increases by 5% every year until 2024, under a bilateral free-trade agreement signed in 2015.

Chinese wool firms were seeking to expand sources for wool imports to cut reliance on Australian shipments, state media outlet Global Times reported in March.

The import quota for New Zealand wool in 2022 was set at 36,936 tonnes, unchanged from 2021, according to the statement.


  • George Russell





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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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