Beijing penalising Australian goods as economic punishment, official says

A Chinese official has openly declared that Beijing has singled out Australia for economic punishment, saying the federal government cannot profit from China while "smearing" it.

China's government has hit several Australian industries with economic sanctions, imposing hefty tariffs on Australian barley and wine exports while throwing up barriers to several other products including timber, lobster and coal.

But it has typically not framed these decisions as acts of political retaliation.

For example, Beijing insisted it targeted Australian wine because it was being "dumped" at an unfair price, while other Australian products were blocked at Customs after Chinese officials cited problems with biosecurity or labelling.

Australian officials have long scoffed at these claims, saying Beijing has been laying a thin veneer of plausible deniability on its campaign of economic punishment.

And on Tuesday evening Chinese Foreign Ministry spokesman Zhao Lijian also seemed to drop the pretence.

When he was asked about a drop in Australian agricultural exports to China, Zhao made it clear Beijing had deliberately targeted Australian goods.

"Mutual respect is the foundation and safeguard of practical cooperation between countries," he said.

"We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China and undermining China's core interests based on ideology."

Zhao also declared that Australia was being punished because it was trying to attack China on behalf of the United States, and suggested that American farmers were the big winners from Chinese tariffs on Australian goods.

"When a certain country acts as a cat's paw for others, it is the people that pay for misguided government policies," he said.

"From what you mentioned in your question, we can see how such a practice has served the country concerned."

One Australian government source rubbished that claim, calling it a "crude" attempt to drive a wedge between Australia and the US.

Federal Treasurer Josh Frydenberg did not directly comment on Zhao's remarks, but said Australia was dealing with a "more assertive" China.

He also pointed out Australia was still raking in massive amounts of revenue from iron ore exports to China.

"They have made no secret of the fact that some our exports are not making their way to China - our barley, wine, coal," he told reporters in Canberra.

"But what is making its way to China because they need it most is our iron ore, and the price of iron ore is at record highs. And that is providing significant revenue.

"But we will not put economic interests first. We will put the broader national interest first."

Preliminary data also suggests that while US cattle farmers have grabbed a larger Chinese market share at the expense of Australian producers, a range of other countries, including Indonesia, New Zealand and France, have been the chief beneficiaries in other sectors.

The rift between China and Australia has deepened in 2021 after a turbulent 2020 that saw a high-level diplomatic freeze and rapidly mounting disputes over trade, foreign interference, Chinese investment, the Covid-19 outbreak and human rights abuses in China.

China's campaign of economic punishment has not significantly escalated this year, but Beijing has regularly publicly criticised Australia and blamed the federal government for deteriorating ties.

In May it suspended a largely dormant economic dialogue with Australia, while last month it announced it would take Australia to the World Trade Organisation over Australian tariffs on several Chinese products.

Australia has also taken China to the WTO over its tariffs on barley and wine.

Last month the departing secretary of the Department of Foreign Affairs and Trade, Frances Adamson, said China was "dogged by insecurity", and she described its decision to release a list of "14 complaints" about Australia as a "massive own goal".

- ABC