Photo: CFP

 
China launched an anti-subsidies probe into Australian wines on Monday, less than half a month after it started an anti-dumping probe against the same product, signaling a continued cool down in economic and trade relations between China and Australia amidst the Morrison administration's escalating hostilities toward China.

The Chinese Ministry of Commerce announced on Monday that it was launching an anti-subsidies probe into Australian wines sold in containers holding two liters or less. The investigation is expected to be completed by August 31, 2021 under normal circumstances, but could be prolonged until February 28, 2022, the ministry statement said.

The move came after China launched anti-dumping probe against Australian wine on Aug 18. 

"Conducting anti-dumping and anti-subsidy investigations together is a standard trade investigation process under WTO rules. In China, these two investigations normally come one by one in a short period," Li Guoxiang, a research fellow in the agricultural sector at the Chinese Academy of Social Sciences, told the Global Times on Monday.

"Based on my study of the Australian agricultural sector a few years ago, in 2013-14, it is difficult for the cost of Australian wine to be lower than Chinese domestic wine, so the (Australian government) are likely providing subsidies to their farmers. That's one of the reasons China has launched the anti-subsidy investigations," Li explained.

Australia's wine exports may be heavily impacted if the investigations turn out to be the case, according to analysts.

"The Morrison administration should be blamed if Australia's exports to China are reduced, because the administration should have known that its unreasonable actions would bring adverse effects to China-Australia trade relations," Zhao Gancheng, director of the Center for Asia-Pacific Studies at the Shanghai Institute for International Studies, told the Global Times on Monday.

"China has done nothing bad to Australia, whereas Australia - in its move to side with the US - keeps unreasonably accusing and attacking China," Zhao said, noting that doing so severely damages political trust between China and Australia.

The Morrison administration, echoing the "trade baton" policy of the US Trump administration, was the first Western country to shun Huawei's 5G equipment, while calling for an independent investigation into China's pandemic situation, suspecting that the COVID-19 was from China.

"Products that China imports from Australia can be bought from other countries," Zhao added. "If the Australian government doesn't care about its economic interests, of course China can import from other countries," 

Australia's wine exports to China have been surging since 2019 after the free trade agreement took effect earlier that year, which allowed Australian wines to be imported into China without tariffs. 

In 2019, Australia's wine exports to China rose 12 percent year-on-year to Aus$1.28 billion ($943 million), becoming China's biggest wine provider with a 37 percent share of China's yearly wine imports - well ahead of France at 27 percent, Chile at 13 percent, and Italy at 6 percent, according to import data from the Global Trade Atlas.