China is ramping up its other big trade war

November 4, 2020, 9:54 AM UTC

The ongoing feud between China and Australia reached a new pitch this week with Chinese ports reportedly blocking a growing list of Australian imports worth some $4 billion.

Last weekend, China’s customs agency banned imports of timber from Queensland, claiming it had found a beetle infestation in one shipment. On Sunday, Australia’s Seafood Trade Advisory Group said lobster exports had been held up at Chinese ports, too, as customs officers increased scrutiny of the crustaceans. Last year, lobster imports from Australia were worth around $530 million.

On Tuesday, the South China Morning Post reported that Beijing planned to ban imports of Australian wheat as well, cutting off trade worth $394 million. According to the Post, officials have already told importers of the impending ban, which won’t be officially announced. Bans on Australian sugar and copper ore are also expected to take effect this week.

“The numerous reports of difficulties that different Australian exports are facing on entry into China are of concern,” Australia’s Trade Minister Simon Birmingham said in a statement, adding that China has “consistently denied any targeting of Australia.”

Beijing claims that the disruptions in trade are due to organic decline in demand; it has denied that it is deliberately prohibiting Australian imports from entering the mainland.

“Relevant companies reducing imports of relevant products from Australia are acting on their own initiative,” China’s Foreign Ministry told Reuters Tuesday.

This round of clandestine bans isn’t the first instance of Beijing imposing unofficial embargoes on Australian goods. Last month, Chinese government officials gave verbal instruction to China’s steel mills and power plants to stop importing Australian coal. Soon after, Australian mining giant BHP told shareholders that several of its Chinese customers had deferred orders.

The countries have been at odds for years now. Australia is enormously dependent on China, but it’s remained a vocal critic of Beijing. Even as China remains engaged in a trade war with the U.S., Beijing has escalated its feud with Australia amid the coronavirus pandemic, putting trade between the two powers—totaling $235 billion annually—at risk.

Subscribe to Eastworld for weekly insight on what’s dominating business in Asia, delivered free to your inbox.

Beijing’s increased scrutiny of Australian imports appears to be retaliation for Canberra leading the call for an independent investigation into the origins of the COVID-19 pandemic that started in the mainland.

In April, Australia Prime Minister Scott Morrison advocated imbuing the World Health Organization with powers similar to those of UN “weapon inspectors,” to investigate the outbreak in Wuhan, China. The combative language implied that Beijing had played an active role in the viral spread.

At the time, China’s ambassador to Australia warned that if Canberra pursued an investigation into COVID-19, Chinese consumers might begin boycotting Australian imports. But, on the day a watered-down version of Australia’s proposal passed the World Health Assembly in June, Beijing took action and imposed tariffs on Australian shipments.

Beijing imposed 80% tariffs on Australian barley shipments and blocked beef imports from four Australian processing plants, citing labeling and compliance issues in June. Then in August, officials launched antidumping investigations into Australian wine.

China is the largest overseas market for Australian winemakers; it imports $850 million worth of Australian wine a year. It is also Australia’s largest trading partner in general, receiving $103 billion in Australian exports in 2019.

In an interview with Bloomberg on Tuesday, Australia’s former treasurer Joe Hockey accused China of using its economic clout to “bully” Australia. But, he warned, “bullying never works with Australia.”

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.