Tuesday, September 21, 2021

Australian cotton hopes for Vietnamese, Thai buyers after China halts imports

Escalating tensions between China and Australia worsened when Canberra called for an enquiry into the origins of Covid-19.

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Australia is looking for customers for its cotton in countries such as Vietnam as tensions with China threaten to leave Canberra with large stockpiles, sources told Reuters on Thursday.

In October, Chinese cotton mills were ordered to stop buying Australian cotton, threatening a trade worth nearly US$700 million amid escalating tensions between the two countries.

Australian producers didn’t immediately feel the impact, however, as a sustained drought had led to record low cotton production. Since then, the rains arrived on the east coast and the country’s growers are on course to produce over 500,000 tonnes of cotton leaving exporters scrambling to find alternative customers to China.

“China typically takes 60% of Australian cotton exports. We are working to boost buying from Vietnam, Thailand and other Asian countries,” said an anonymous source.

Australia will begin harvesting its crop in April, giving exporters several months to line up new customers.

China is by far Australia’s biggest export market, but the relationship soured in 2018 when Australia became the first country to ban China’s Huawei from its 5G network, and worsened this year when Canberra called for an enquiry into the origins of Covid-19.

As ties deteriorated, China imposed tariffs on Australian barley and slowed its imports of Australian beef and coal.

From Dec 11, Beijing will also temporarily impose anti-subsidy fees on some Australian wine imports, increasing pressure on the huge industry.

Australian timber, copper ore, sugar, and lobster have also suffered a similar fate, and the list is likely to grow.

The row looks set to deteriorate further with growing calls for Canberra to consider action at the World Trade Organization.

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