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Can Australian vintners see a path through political tensions with China?

07 February 2024 By Eloise Feilden

The Albanese government still expects China to remove its tariffs on Australian wine by the end of March, despite Yang Hengjun’s death sentence striking the latest blow to relations between the two countries.

A Chinese court handed Australian writer Yang Hengjun a suspended death sentence this week, five years after his arrest due to accusations of spying.

Dr Yang’s sentencing is the latest blow in ongoing political tensions between the two countries.

Late last year Australian Prime Minister Anthony Albanese made a visit to China to help rebuild relations which have deteriorated in recent years. And relations were looking to be going in a positive direction, with China lifting its restrictions on Australian coal and barley.

Hopes have been high among Australian vintners that the same will be done for punitive tariffs on wine in China, and The Australian Financial Review understands the government expects Beijing to remove those tariffs by the end of March.

Exports to China are also strong at the moment. According to Reuters, the latest data for December show goods exports hit AU$18.5 billion (£9.6 billion), up 14.7% year-on-year. China has bought AU$203 billion worth of Australian exports over the past year, over a third (37%) higher than the same period of 2019 before Covid-19 had an impact. Much of this is iron ore.

The news of Dr Yang’s sentencing has hit hard. The Australian government says it is “appalled” by the outcome. Foreign Minister Penny Wong said the government would be “communicating” its response to Beijing in “the strongest terms”, the BBC has reported.

The sentence may be commuted to life imprisonment after two years, according to Australian officials.

But tensions are unlikely to impact negotiations when it comes to wine tariffs. Lee McLean, chief executive of Australian Grape and Wine, said the industry understands the tariffs to be separate from Dr Yang’s treatment.

He said there was an “understanding in the relationship with China” that there would be “different issues that come up from time to time”, The Australian Financial Review reported.

McLean continued: “But from our position, there is an agreement in place with China for a review of duties and that’s still in place. We’re certainly hopeful that leads to a positive outcome for us and if it doesn’t, the understanding is Australia will resume the World Trade Organisation dispute.”

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