A2 Global's China Brief contains assessments of events and policies that may impact commercial interests, personnel and assets throughout Greater China. This edition includes the trade implications of banning Chinese technology, and a cyber-attack believed to have been carried out by a China-linked hacker group.
China & Australia - Chinese import restrictions on Australian coal set to continue
China & New Zealand - State media campaign escalates tensions with New Zealand
China & New Zealand - Media allege returned New Zealand flight was due to mis-labelling of Taiwa
China & European Union - E.U. considers sanctions after cyber-attack
China & Australia – Chinese import restrictions on Australian coal set to continue
18 February: Australian media has reported that, in a bid to boost domestic coal prices, China’s import restrictions on Australian coal deliveries to its ports that were imposed in January are set to continue without any sign of when they will be lifted. China previously relied on Australia for around 75 per cent of coal used to produce steel. However, Chinese steel production experienced a slump in late 2018. At the same time, Chinese imports of cheaper, lower quality Indonesian coal has risen, as the coal can be used in domestic blends.
Why it matters: China first introduced a quota on Australian coal imports in 2018 to ensure they would not exceed 2017 levels, with restrictions on imports expected to have been lifted by early 2019. However, the imposition of further restrictions indicates a prolonged period of uncertainty in coal-trading between the two countries, which could last from a few weeks to a few months. Additionally, it is worth noting that China’s Lunar New Year festival can distort the data around commodity imports for the first two months of the year. There is a regular surge in import demand before the festival, which this year began in February. Though this could carry into the next month, it is likely to normalise by the end of this month.
China & New Zealand – State media campaign escalates tensions with New Zealand
15 February: An article published by China’s state-owned Global Times on 13 February reports that Chinese tourists are cancelling their holidays in New Zealand in retaliation for the New Zealand government’s blocking of Chinese techonology giant Huawei telecommunications equipment on 27 November 2018 from being used in a 5G rollout, due to national security concerns. New Zealand’s decision followed a series of similar actions taken by other governments, including the U.S. and Australia. The article, which forms part of a propaganda campaign from Chinese state-owned media, states that a marked decrease in Chinese tourists will adversely impact New Zealand’s economy, as Chinese tourists account for New Zealand’s second-largest tourist market and contribute USD2.93 billion to New Zealand’s economy per annum.
Why it matters: China’s media campaign marks an escalation in tensions between the two countries. A2 Global warns businesses that China, which is New Zealand’s largest trading partner, could take further punitive actions against New Zealand by targeting New Zealand’s exports to China, including kiwifruit, dairy and seafood; products for which China is New Zealand’s largest export market. New Zealand’s biggest seafood exporter Sanford has already faced getting customs clearance for salmon exports in Chinese ports.
A2 Global further reiterates its advice that growing political opposition to Chinese involvement in critical technology infrastructure, particularly in Western democracies, poses a significant risk to firms considering business dealings with Chinese technology companies. Firms should adjust strategic planning to reflect this.China & New Zealand – Media allege returned New Zealand flight was due to mis-labelling of Taiwan