MNI EXCLUSIVE: China Aims At Australian Trade Over Virus Spat

--Anti-Dumping Tariffs Retaliation For Canberra's Trump Support

     BEIJING (MNI) - Australia could find its barley exports to China

effectively banned for up to five years as Beijing considers imposing

anti-dumping tariffs, with Canberra caught in the crossfire between China and

the U.S. tensions, sources close to the Chinese government told MNI.

     Although denied by the Chinese government, any trade restrictions on

Australian exports -- which may last four to five years, a typical length for

anti-dumping investigations -- will likely be a response to Canberra's echoing

Washington's call for an investigation into the origins of the Covid-19

outbreak, said an industry source.

     China, Australia's biggest market, has also suspended beef imports from

four Australian processing plants, jeopardising thousands of jobs.

     --PUNISH ALLIES

     "The message is quite clear: China won't take on the U.S. directly, but can

definitely punish U.S. allies who support President Trump's claim," another

source added.

     Cutting imports from Australia would also allow China to increase purchases

of the products from the U.S., helping China meet import commitments under its

Phase 1 trade deal, the second source added.

     The Trump administration had sought to make China bear the blame for the

pandemic by suggesting that the virus was leaked from a lab in Wuhan and by

accusing China of an initial coverup.

     Shen Dingli, associate dean at Fudan University's Institute of

International Studies said, "I believe the U.S. is glad to see these (bans on

Australian beef and tariffs) happen as the moves will benefit the U.S. exports."

     --THREAT TO BEIJING RULE

     China sees claims such as those laid out by Trump as direct challenges to

Communist Party rule, virtually forcing it to react, said Shi Yinhong, a

professor with Renmin University and an advisor to the government.

     This is not the first time Beijing has appeared to punish a U.S. ally for

cooperating with Washington over China. In December 2018, Canada arrested Meng

Wanzhou, chief financial officer of hi-tech giant Huawei, at the request of the

U.S. for allegedly breaching U.S. sanctions against Iran.

     China detained two Canadian citizens and targeted imports of canola in

following months, although denying any direct linkage with the Meng case.

     "It shows that countries around the world have diminishing wiggling space

in the middle of the two giants," said a third source close to the government.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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