In 2020 China applied barriers to the export of 12 Australian industries and began 2021 with ominous signs for the higher education sector. A report published by Future Directions International in December 2020 outlined the logic of China’s economic coercion based on an asymmetry of costs, where China seeks to impose costs on Australia to change its behaviour, but also selects industries where there will be low costs for China, or even strategic benefits.

Thus China’s tariffs on barley targeted a high value export trade, but also aimed to diversify supply of this important grain away from Australia. This article argues that comparable forces are at play in the case of wine. Australian wine exports were rapidly gaining market share in the lucrative Chinese wine market, which China argued damaged its domestic industry, so the trade stopped through a spurious anti-dumping case. As China is a major market for premium wines, there will be significant effects on the industry – likely to be higher than for other affected commodities – that the industry will adapt to.

Key points:

• Twelve industries were targeted in China’s economic coercion programme on Australia in 2020. While all cases are designed to pressure the Australian Government to change policy, particular industries were targeted for particular reasons.
• Australian wine has a high coercion value because exports to China have exploded in recent years to become a AUS$1 billion market. Trade heavily exposed the industry to the Chinese market, especially for premium reds.
• Analysis in this paper also shows that this growth is seen as a threat to the development of the Chinese domestic wine industry that was thwarted through a protectionist and spurious anti-dumping case. The barriers will have a substantial effect on the Australian wine industry.
• The broader lesson is that Chinese economic coercion is often driven by domestic factors as much as it is by bilateral relations. Cases such as this could be expected to increase under China’s economic self-reliance programme.