China’s economy is still months away from a full recovery, business survey finds

BEIJING — China has not fully recovered from the shock of the coronavirus pandemic, business leaders said in a survey by the China Beige Book released Tuesday.

After about a year since Covid-19 first emerged in the Chinese city of Wuhan, roughly two-thirds of executives polled by the third-party firm said they don’t expect sales, profitability and hiring to return to 2019 levels until at least three months from now.

China Beige Book conducted more than 3,300 interviews between Nov. 12 and Dec. 11 in its latest quarterly business activity survey.


The two countries’ relationship has deteriorated since Australia supported the growing call for an international inquiry into China’s handling of the coronavirus.

China has slapped tariffs on Australian wine and barley exporters.

Restrictions on coal, lobsters, timber, red meat and cotton exports from Down Under have also been placed.

China has not introduced any restrictions on Australia’s biggest export to the country: Iron ore.

SINGAPORE — China is Australia’s largest trading partner and a top export destination.

Australia is one of the few developed nations on Earth that exports more into China than it imports from China. In the 2018-2019 fiscal year, China took in about 32.6% of all Australian exports — that is about 153.2 billion Australian dollars ($116.79 billion). By far the largest export was iron ore.

The relationship between the two countries has deteriorated since Australia supported a call for an international inquiry into China’s handling of the coronavirus, which was first reported in the Chinese city of Wuhan. Last month, Australian news outlets reported that the Chinese embassy there had threatened the Australian government and handed over a list of alleged grievances toward Canberra.

China has taken several measures this year that impede Australian imports, ranging from levying tariffs to imposing bans and restrictions. Here’s a look at the Australian export sectors being affected:


In May, Beijing slapped anti-dumping and anti-subsidy duties to the tune of 80.5% against Australian barley — a move that effectively shut Australian barley producers out of the Chinese market. The Chinese commerce ministry claimed that an inquiry that began in 2018 confirmed Australia dumped barley, which allegedly led to significant damage to China’s domestic industry, Reuters reported.

Australian government officials have denied the allegations and said the country’s farmers are some of the least subsidized among OECD nations. Canberra has also asked the World Trade Organization to mediate in the dispute. Experts expect that dispute to take some time to resolve.


China’s commerce ministry in November announced preliminary anti-dumping duties ranging from around 107% to 212% on Australian bottled wine imports. That followed China’s anti-dumping probe into wine imports from Australia. China levied additional temporary tariffs of around 6.3% to 6.4% earlier this month following a separate probe into Australian wine subsidy schemes.

Australia’s national association of grape and wine producers said small exporters, grape growers and regional communities are going to feel the brunt of China’s decisions as the larger exporters would be able to diversify.

Red meat

China suspended imports from six Australian beef suppliers, with the latest ban coming earlier this month, according to Australian media. For the first five bans, China reportedly cited labelling issues and health certificates.

Local media also reported this month that Australian lamb exporters said they were unable to get back into the Chinese market under Covid-19 restrictions and that the country’s honey, fruit and pharmaceutical exports to China are at risk.


Two Australian cotton industry groups in October said China was discouraging its spinning mills from using cotton imported from Down Under. China has an import quota of around 894,000 tons of cotton that are subjected to minimal tariffs, according to a U.S. Department of Agriculture report. Anything imported beyond that limit reportedly faces a stiff 40% duty.

Australia’s agriculture minister told CNBC that the government worries Chinese officials are telling millers to block Australian cotton from being counted within that initial quota.


China has banned timber imports from the Australian states of Queensland, Victoria, and more recently, South Australia and Tasmania.

“The Chinese customs has since January detected many cases of live pests in timber imported from Australia, such as longicorn and buprestid beetles. These live pests, if allowed into China, will gravely endanger China’s forestry production and ecological security,” Chinese foreign ministry spokesperson Wang Wenbin said in a Nov. 2 press conference following reports of the ban on Queensland log exports.

“China has notified the Australian side of the cases and asked Australian to investigate and take measures to prevent recurrence,” he said.


Chinese media outlets have said that the country’s top economic planner granted approval to power plants to import coal without clearance restrictions except for Australia, Reuters reported. That followed earlier reports that Beijing gave state-owned utilities and steel mills verbal notice to stop importing Australian coal.

Coal is Australia’s third-largest export to China. But the percentage of coal exports to China has been shrinking over the years, according to analysts who say Australian exporters have found additional buyers in places like South Korea, Vietnam and Japan.


Local media reports in November said tons of live lobsters were stranded at Chinese airports and clearing houses, awaiting inspection from Chinese customs officials.

Australia’s Seafood Trade Advisory Group said last month the industry temporarily stopped rock lobster exports to China and was working with Chinese and Australian authorities to respond to Beijing’s new border inspection protocols. The group said planning was also underway to find other destinations for lobsters including Australia’s domestic market.

Iron ore, education, tourism

Despite export restrictions and levies on the above sectors, Australia’s economy has remained relatively unaffected by Beijing’s moves. That is likely because China has yet to impose any kind of restrictions on Australia’s largest export to the country: iron ore. Prices have surged to record-high levels in recent weeks.

Given China’s reliance on Australian sea-borne iron ore, along with an increased appetite for it due to aggressive industrial-led stimulus, it is unlikely that the iron ore trade would be significantly affected, according to analysts at the National Australia Bank.

“Nearly half of all Australia’s exports to China are iron ore. Goods subject to tariffs or other restrictions make up a small share of overall GDP, though importantly will have important sector specific and regional impacts,” the analysts said in a Dec. 14 note.

But they warned that Australia’s education and tourism industries, which rely on Chinese students and tourists, could be affected if Beijing’s attitude toward them shifts once borders reopen.(source:CNBC)

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