China’s insatiable appetite for Australian iron ore exports is masking a massive slump in overall exports, government officials have revealed, as Beijing announces new long-term restrictions on Australian wine.

Excluding iron ore, Australian goods exports to China plummeted in value by 40% in the last six months of 2020 compared to the same period in 2019, Australia’s Department of Foreign Affairs and Trade (DFAT) officials told lawmakers on March 25.

Iron ore has become so central to Australia’s export portfolio that when those shipments are included, the overall drop in exports during the period shrinks to just 2%.

While the coronavirus-induced economic downturn triggered a sharp reduction in exports from Australia to the rest of the world, they only fell by around half the rate of exports to China, DFAT chief economist Jenny Gordon told a hearing of the Senate’s foreign affairs and trade committee.

China, by far Australia’s largest trading partner, has left producers in key Australian export industries such as coal, wine, beef, lobster, timber and cotton reeling by slapping hefty tariffs on some products and outright banning the import of others. In some cases, China cites counter-dumping measures or customs issues, but in others has not provided an official explanation.

Chinese officials, including its envoy in Canberra, have accused the conservative government of taking an anti-China stance by calling for an international investigation into the origins of Covid-19 and criticising Beijing over the mass incarceration and other reported abuses of the Uyghur minority in Xinjiang province.

Australian coal has been the most high-profile victim of the spat. Coking and thermal coal exports to China fell to zero in January this year, compared to monthly exports of A$1.4bn just six months earlier in June 2020, Gordon said.

There are still around 40 vessels carrying Australian coal anchored off the coal port of Jingtang waiting permission to unload, the head of DFAT’s East Asia division Elly Lawson confirmed. This includes several ships that have been in limbo for months.

Among the vessels snared in the trade row is the Ohshu Maru, a bulk carrier which departed the Australian coal port of Gladstone in July last year and which is still waiting to unload its cargo more than eight months after arriving in Jingtang, according to MarineTraffic data.

Questioned by an opposition senator about the welfare of the sailors manning the ships, Lawson said the government has raised the matter “on a number of occasions” with Chinese authorities.

Wine woes

A report released on March 30 by the federal government’s Office of the Chief Economist said China’s unofficial ban on Australian coal had caused the largest fall in thermal coal export revenue in 30 years, but that there are tentative signs of a recovery.

The Australian Bureau of Statistics said last month that coal shipments have been successfully diverted to markets such as India, Japan and South Korea, which has partially offset the absence of the Chinese market.

The same figures also suggest the export slump could be abating, with Australia recording a A$5.2bn trade surplus with China in December following a 21% jump in exports, although the bureau said the main driver of growth was iron ore.

The DFAT officials testified that total Australian barley exports have actually grown despite an 80.5% tariff imposed in May 2020 – following an 18-month anti-dumping investigation – which effectively killed the trade with China. Buyers in Saudi Arabia, Kuwait, the United Arab Emirates and Thailand have all filled the gap left by the loss of the Chinese market, Gordon said.

Other exporters have been unable to make up the difference. Wine exports to China were just A$1mn in January 2021, Gordon said, compared to A$164mn in October 2020. While exports to other key markets such as the UK and US have grown, the rise has not offset the loss of lucrative Chinese consumers, who were voracious consumers of preferred expensively-priced, premium red wines.

China’s Ministry of Commerce announced on March 26 that it will impose tariffs of between 116 and 218% on sub-two-litre Australian wine bottles for the next five years, following an anti-dumping investigation.

Australian trade minister Dan Tehan branded the decision “extremely disappointing and completely unjustifiable” and said the government will consider taking the issue to the World Trade Organization.

Tehan also confirmed he is yet to receive a response from his Chinese counterpart to a letter sent in January seeking “to work constructively with him” to resolve the stand-off. But trade officials told senators said they have maintained contact with their Chinese counterparts.