Sino-Australian relation is the diplomatic association established between Australia and China since 1941 with active economic, cultural & political engagement between both the nation.
China is the second-largest importer and seventh-largest exporter for Agri goods and the colossal trade market for Australia especially for barley. Two-thirds of Australia's farm production is exported out of that 28% is transported to China. Where 50% is barley making it countries most prominent market for the respective commodity. The imports have substantially increased over the years reaching new heights since 2009, a relationship based on strong trade custody.
Australia's investment from China was expected to pilot growth in export and production as it could have been an attractive backing destination particularly for grains, sugar, dairy, and food processing sectors.
Over the last five years, 60-70% of Australian barley was exported to China but the share has declined due to the natural causes such as draught. Not only this since 2018 the relations between both the nation began to decay when for the first time China set forth an investigation over Australia dumping its barley production and unfairly subsidizing its producers. This was a subtle start of trade tension between them despite the treaty level accord signed in 1948, Australia-China Agricultural corporation agreement (ACACA), or China- Australia free trade agreement (ChAFTA) in 2015 to enhance cooperation across Agri industries and development of trade relations.
Barley is used to making beer and livestock feed in China which happens to be the largest brew market by volume. Thus, consumption is huge in the country. But Chinese slap an 80% tax on barley imported from Australia. Believed due to several reasons such as Australia shove in inquiry for COVID-19 origin along with various other influential English speaking nations or as a penalty for dumping. The tariff will be imposed for 5 years period. This variance may cause the Australian grain industry, rural & regional economies at least $500 million annually, and likely cease shipment of barley to China driving prices up excessive levels.
Thus, any company importing barley from Australia is bound to pay 73.9% duty and an extended 6.9% tariff on claims of an unfair advantage of subsidies, Even though Australia denies Chinese commerce ministries detection on dumping and grant as they are considering taking the dispute to WTO.
$1.5 billion worth of barley was sold to China by Australia in 2018 but due to drought and dumping allegations trade value fell to $600 million last year.
Chinese barley demand is gauged to be 6.9 MT by next year where 6 MT is expected to be imported but due to the on going issue China might increase transports from Canada, France, Argentina & Ukraine.
Meanwhile, Australian Farmers are looking to find new markets like Japan, India, Vietnam, Saudi Arabia & Indonesia, where Barley is used for Livestock feeding & brewing as well.