China launches second probe into Australian wine trade with study of subsidies for producers

China has ramped up the escalating diplomatic spat between Beijing and Canberra by launching an anti-subsidy probe into Australia’s $1.1 billion wine export sector. News of the investigation, posted on the Chinese Ministry of Commerce’s website this morning, comes just two weeks after it announced an investigation into whether Australian winemakers had dumped bottles in China at reduced prices over a five-year period, crowding out local producers. The latest investigation will look at the range of subsidies available to the Australian wine industry. The ministry said it had formally received a countervailing investigation application from the Wine Industry Association of China on behalf of the domestic wine industry to look at imported wines in containers of two litres or less. The investigation could result in duties being imposed on Australian wine imported into China to offset the alleged subsidies offered to Australian producers. The application is claiming Australian producers have received significant subsidies, including government-funded conservation projects, funding for sustainable water infrastructure, concessional drought loans and dozens of regional innovation programs, which the Chinese government claims are proof Australian winemakers have an unfair trade advantage. “The application stated that the products applied for investigation have received subsidies from the Australian Government, and there is a total of 40 subsidy items that may benefit from the Australian wine industry,” the ministry said. The investigation will cover exports from January 1, 2015 to the end of last year. Australia’s relationships with China, which is both WA and the nation’s biggest export partner, has been increasingly tense since Prime Minister Scott Morrison angered Beijing with his early calls for a probe into the origins of the coronavirus. Australian Grape and Wine chief executive Tony Battaglene said the announcement had been expected and was no surprise. “There are no subsidies for exports in Australia and the support measures are aimed at small domestic producers and nothing to do with exports,” Mr Battaglene said. “We don’t expect it to be a significant investigation. You normally do both investigations together, as they did with barley earlier this year, so it’s not surprising. “China is an important market for Australian wine and our wine is in demand from Chinese consumers. Australia has a large number of exporters with close cultural ties to China.” While there is a strong suggestion of political motivation behind the anti-dumping investigation, industry sources say there is a growing belief that there is an even stronger economic driver as well, based on a desperate struggle for the local industry in China to survive again the dominance of imports headed by wine from Australia. Bulk Australian wine from places like the Riverland are being used to supplement and improve the quality of Chinese wines. Support for the Chinese wine industry has also come from Chinese President Xi Jinping who recently visited one region in north-west China to express his support for the industry and its positive impact on living standards and employment. Trade Minister Simon Birmingham indicated earlier this month the Federal Government was expecting the anti-subsidy investigation, and has rubbished the suggestion. “Australian wine is highly sought after in China because of its quality,” he said. “Australian wine is not sold at below market prices and exports are not subsidised.” Mr Birmingham said the Government would “stand” with the Australian wine industry to “uphold their integrity and hard-earned reputation”. “Our wine industry has worked incredibly hard to establish itself as a world-leading producer and export powerhouse,” he said. Australia’s relationships with China, which is both WA and the nation’s biggest export partner, has been increasingly tense since Prime Minister Scott Morrison angered Beijing with his early calls for a probe into the origins of the coronavirus. China earlier this year slapped tariffs on Australian barley following an anti-dumping investigation and has also imposed suspensions on five Australian beef abattoirs.