♪♪♪ ñçñqñqñqñqññññ#ñ#wwñ?ñ? ♪♪♪ ♪♪♪ ♪♪♪ stephen long: the lunar new year is a time of celebration. ♪♪♪ stephen: in chinatown, they're feasting on tasmanian rock lobster. china used to be the biggest market for this delicacy before

a trade stoush that's smashed australian businesses. michael blake: only last night, i had a fisherman on the phone crying to me, you know, wondering how he'soing to pay his bills. and yeah, this is only the start, i think. stephen: for the best part of a year, china's trade sanctions have hit industry after industry. doug smith: this was massive. this was the end of our export to china. tony battaglene: the markets actually dropped to zero. brendon taylor: we're all in survival mode. we're doing the best we can. that's all we can do. stephen: the dispute is about far more than trade. scott waldron: the trade barriers that china imposed on australia in 2020 are cases of economic coercion. rory medcalf: china is trying to coerce australia into supporting essentially china's interests.

stephen: there's a fierce debate about how to respond. doug clarke: we're not going to lay down in a fetal position and get kicked to death. jane golley: i just do wonder how many times we might choose to poke the dragon before the dragon turns back and blows fire at us in a pretty painful way. stephen: tonight, on "four corners," we investigate china's trade sanctions against australia. we'll meet the australian businesspeople hit hard by china's bans and tariffs. and we'll explore whether beijing is using trade as a weapon in a campaign of political coercion. ♪♪♪ female: china has followed through on its threat to whack crippling tariffs on australian barley, a move that will further inflame tensions between the two nations.

the 80% tariff will be in place for five years, a decision that could cost australian farmers hundreds of millions of dollars. stephen: the salt lake country of southern wa is a long way from canberra and a world away from beijing. but farmers here have found themselves on the front line of a trade war with china. it's a windswept landscape, and it may not look like a food bowl, but it's rich terrain for grain. doug smith: in this particular area, the other lakes area of western australia, barley is one of their main cash crops. i mean, it probably accounts for 50% of the grain that's grown here in western australia. stephen: doug smith heads the industry association

wa grains group. until last year, he was riding a barley boom driven by surging chinese demand. at its peak, china was buying more than a billion dollars' worth of australian barley a year. doug smith: we were sort of exporting somewhere around six million ton of barley to china; we're talking australia-wide here. i think west australia alone was exporting somewhere around three and a half million ton. so, you know, we've forsaken all the other markets basically because it was all we could do to produce enough to satisfthe chine market. stephen: but the risk of bankit

may when it imposed a crippling 80% tariff on the industry. doug smith: all of a sudden, here it was. and this wasn't, you know, the $10 or $15 a ton that the industry thought might've been imposed on us. this was massive. this was the end of our export to china. stephen: to make matters worse, the announcement of china's decision came when the new season's crops were already in the ground. doug smith: if they had have made the announcement of that level of tariff in, oh, let's say, february, it would have been quite easy for growers to say, "well, look, we're not going to grow as much barley. but to wait until after, for all intentional purposes, a lot of the australian barley crop was planted. yeah, it was a strategic? i would think so. stephen: it was a bitter blow after exhaustive efforts to

refute china's allegations that australia was dumping barley, at below the cost of production, onto the chinese market. doug smith: the timelines that was put on the industry to respond were so short. it was incredible. and the detail that they were looking for. they were looking for basically financial detail back down to grower level. stephen: doug smith's home is a meeting point for growers caught up in the china tensions. among them, his friends doug and debby clarke. they think china's move is calculated. doug clae: they'veorked out very well to target the industries that cause the least amount of problems itheir country, so it doesn't shut down their woolen mills, so the wool keeps going; the iron ore. so, they're strategically picking off australia,

where it has the least impact on their economy. stephen: debby, how do you feel about this? debby clarke: well, it is a bit annoying. but you can't waste energy on being angry or annoyed when you cannot influce a foreign government. doug clarke: i mean, we can't do trade at any cost. i mean, we got to uphold, you know, our principles and the principles of the australian way. we don't want to lie down in a fetal position and get cked to death. we need to stand up and fight back. stephen: australia is challenging china's tariff at the world trade organization. dan tehan: it might take one or two years for us to resolve it, but the principle of it is incredibly important. we want to go to the umpire, and we want to get a decision from the umpire, whether the actions being taken are right or not. if we don't have organizations like the world trade

othe rule of the jungle.o to, then it's basically stephen: barley was the start of a slew of trade allegations and sanctions that followed a souring of relations between canberra and beijing. female: the foreign minister, marise payne, is refusing to be drawn on whether she trusts chinover its handling of the coronavirus pandemic. stephen: australia's call for a covid inquiry appeared to be a catalyst. female: a chinese analyst has described the foreign minister marise payne's calls for an independent inquirinto the origins of the ronavirus outbreak and the globalesponse as deplorable. stephen: the reality is the tensions are deep and longer snding. rory: it's a big mistake to think that this simply because of the way the australian governmt responded to the pandemic, the way the australian government very bluntly called for an international investigation into

the origins of covid-19. if it wasn't that, it would have been something else. there's been an accumulation of friction points between australia and china, i'd say at least over the past five years, that go to fundamental differences of interests and of political values. jane: if you look at the downward trend in political relations, it actually goes back, i think, to a high point, of about 2014, and there are a number of actions on both sides, of both the chinese and australian government, that signal a pretty consistent doward trajectory, and there's not a lot of reason to think that that's going to turnround. stephen: china set out its grievances in a document leaked to the media last year. they included banning chinese telco huawei from building australia's 5g network. australia's foreign interference laws. the call for an "independent inquiry into covid-19".

australia's "incessant wanton interference in china's xinjiang, hong kong and taiwan affairs". and "antagonistic" media reports that were "poisoning the atmosphere of bilateral relations". the reporter who was handed the document by an embassy official had no doubt about china's agenda. jonathan kearsley: i was very clear in asking her, what does this mean in the context of the trade issues we'd seen with beef, and wine and barley and the like? and she said. "it's all linked". she looked at me, and she said, "if you make china the enemy, china will be the enemy. stephen: on the same day, china's powerful foreign ministry echoed key grievances in answer to a question about the trade dispute.

rory: many of these points go to the independent policy choices of the australian government in a democratic system, including choices to do with legislation, with the funding of think tanks, with the freedom of the australian media, with diplomatic positions australia takes in the international system. so, it's simply untenable for any australian government to concede on those points. and i fear that, in a way, the chinese government has painted itself into a corner. stephen: in the same month that china effectively banned australian barley, another rural export was hit. female: four australian abattoirs have been banned from selling red meat into china. one of the meatworks is in casino in northern nsw, while

three are based in queensland. patrick hutchinson: when we found out it was all hands to the pump exceptionally quickly. i certainly was on the phone for basically 72 hours just because of the sheer shock of this coming in. it was without warning. stephen: casino is the heart of the northern rivers beef belt and home to the northern co-operative meat company, one of the abattoirsuspended by china. it was target for alleged labelling errors on some cartons of beef. scott: in the past, those sort of problems have been either ignored by china, or they've been dealt with on a informal basis, industry to industry, people to people. but in the current environment, china's become particularly

formal about it, with very low tolerances. so that is their pretext to stop that trade stephen: 10% of the casino meatworks' business was lost with the china suspension. what do you reckon about this situation with china? simon stahl: oh look, i'm really focused on doing what i've got to do, in relation to china, and that is i've got to make sure my product leaves here that's acceptable to markets all over the world, and that includes china. i don't really listen to any of the outside noise because i can't control it. stephen: australian abattoirs were suspended for similar issues in 2017, but the matter was resolved in three months. this time, close to a year on, there's no resolution and no

indication of when the suspensions might be lifted. simon: oh, look, hard to tell, but i'm comfortable we're closer to getting back in than we were yesterday. stephen: it doesn't help that chinese officials won't pick up the phone. patrick: it is exceptionally frustrating. and that's the concerning part for us as an industry because our dialogue is what makes us operate effectively well in trade. and if that dialogue's not there, then it's nigh on impossible to try and then fix some of these issues. stephen: when australia's new trade minister, dan tehan, tried to engage his counterpart in china, he was also met with silence. dan: i wrote to him in the middle of january. it was a very extensive letter.

it set out why it was so important for us to be able to have a ministerial dialogue. stephen: what signal do you read into the lack of reply? dan: i'm not quite sure. i'm a little puzzled by it because i think the best thing that all countries can do is maintain dialogue. if you've got differences, the best thing you c do is, is engage and make sure you can work through them. so, my hope is that over time, that's where we'll get to. ♪♪♪ stephen: economist and china expert, scott waldron, grew up on the land, in beef country. his family's property, in the tweed valley of northern new south wales, sends its cattle to the co-op at casino. scott: hey, cattle. hey, cattle. hey, cattle. come, girls.

stephen: scott waldron has also lived and researched extensively in china. he's fluent in mandarin, and well-placed to analy china's trade claims. scott: the trade barriers that china imposed on australia in 2020 are cases of economic coercion. and the intent is for china to change australian policy, including on issues of the south china sea, hong kong, xinjiang, huawei, and foreign interference. stephen: on his reading, the trade sanctions flowed from demands by china's communist party for retaliation against any perceived threats or criticism of china. scott: xi jinping has instructed china to resolutely defend ainst any internal or external threat to the communist

party, and so that so-called "battle stance" has become embedded within the party, within the ministry of foreign affairs, and its wolf warrior diplomacy, and down into economic units, including the ministry of commerce, the state administrations of customsnd quarantine. so, if you're a mid-level official in one of those economic departments, your incentive, the way that you get ahead, is to appeal to that spirit. jane: economic coercion is a very deliberate activity to try and make the australian government change its policy stance. it's certainly not clear that that's what beijing has set out to do and nor is it clear that they have achieved that goal, but i think what we can say is that by the time you've got 14,15 sectors on the cpping block, whether you call it coercion or mething else, it is quite clear that beijing is sending a signal and it looks very much like punishment to me.

stephen: the wine industry was the next target. female: australia's billion-dollar wine exports to china are under threat. is it economic coercion as relations languish? stephen: in august last year, china began an investigation of australian wine, claiming it was being dumped, at artificially low prices, on the chinese market. no region was more exposed than the barossa valley in south australia. hamish seabrook: we had inklings all the way along, probwere going to introducmonths befoa tariff.hat the chinese we had fairly good intel. stephen: at hamish seabrook's family vineyard, the harvest is underway before dawn.

hamish: i've been here more than 30 years, and i love the barossa. it's home. stephen: for years, his main business has been red kangaroo. hamish started the venture with a business partner a decade ago, making wine for china. hamish: i think our first container went in might've been november 2011. we followed that up by a quick trip to china and met some more distributors over there. it's just grown from strength to strength from year to year. stephen: after china began its dumping investigation, the company decided to co-operate and open the books

to its officials. hamish: we've got nothing to hide. we certainly had nothing to hide. everything we do is transparent. we just figured, "oh, well, if we submit and be part of this place where we can open up what we do, maybe the chinese will look favorably when they do introduce tariff." stephen: china imposed massive tariffs on the wine industry, up to 212%. they're in place for five years. red kangaroo copped a slightly reduced rate, but more than enough to smash the busiss. so, your venture red kangaroo is effectively dead? hamish: it's fair to say. this section back there, this is all the dry goods. stephen: this is the fallout from china's trade war. hamish: so it's a vast warehouse.

you certainly get lost in here. stephen: pallets of wine meant for china, now gathering dust. stephen: how many bottles do you have stored here? mish: we've got 60,000 bottles all burning a big old hole in our bank account at the moment. stephen: storing the wine has cost tens of thousands of dollars. hamish: what's worse, we had containers of wine on the water ready to land, and to be honest, we had no idea what was going to happen to those wines, whether they were going to be accepted or not. stephen: the wine spent nearly five months in customs being tested for additives the winemakers don't even use. hamish: who's to blame for this? i could honestly say that i feel that maybe the australian government could have done more to open up dialogue earlier. i feel that the chinese government could have done more

to accept dialogue earlier, i feel that we're just really a pawn in their political game. ♪♪♪ stephen: historic château tanunda looks out over the fields where the first barossa vines were planted in the 1840s. in happier times, the château's wines were enjoyed at the highest level. john geber: this was at the g20 summit in isbane in 2014, where our 100-year-old semillon was chosen as one of the showcase wines of australia. stephen: so you had the president of america and the president of china drinking your wine. john: and the president of château tanunda as well. stephen: dpite submitting to a forensic investigation by chinese officials, chateau tanunda received a prohibitive

tariff, and the timing, in the lead up to the chinese new year sales, maximized the pain. john: so this is the year of the ox for 2021. unfortunately for us, of course, we came into all these tariffs, and everything was sort of closed down. it's a long game. our wine industry is not a marathon. it's not even a double marathon, it's a triple marathon, and you've just got to keep going. stephen: china accounted for 40% of australia's wine exports. tony: it's been a devastating impact. so once the tariffs were introduced, we found that the markets actually dropped to zero. we've got to find a new home for $1.1 billion worth of wine. stephen: there's been significant chinese investment

in the australian wine industry, especially in the barossa. and one of the ironies of china's effective ban is that it's hitting chinese nationals, chinese expats and chinese investors pretty hard. last year, 768,000 bottles of wine from chinese-owned vineyards in this region were shipped offshore to china. this year that's fallen to next to nothing. the grapevines of orchid wines are nestled on the slopes above the valley. jason zhao: so we have roughly about eight ton of the shiraz we'll be harvesting from the vineyard this year and about four ton of the cabernet, which was being harvested on the back of the house. stephen: jason zhao came to australia to study wine in 2005.

he worked for two wineries before starting his own business. nearly all his wine was going to china before the tariff cut it dead. jason: our business dropped for 95%. stephen: ninety-five%? jason: ninety-five%. because we only have another five% for selling the bulk wine to uk market and the us market, which is not be helping us for keep doing the business. stephen: jason's parents migrated to australia to join their son and his family. jason: my parents, they still encourage me. and they say, "if you work hard, you do right things, and one

day, the things will come back. just put your head down and work hard. just keep working." stephen: scott waldron has read and analyzed china's allegations against wine and other industries in the original mandarin. scott: the chinese case against the australian wine industry is even more spurious than it is for the case of barley. so in the case of wine, china is arguing that australia dumped wine into china at below normal price. the price of australian wine export to china is higher than all other countries, than france, or chile, or spain, and

it's many times higher than the price of chinese domestic wine. stephen: as the wine industry dealt with the tariff, sanctions had already moved from farming to mining. ♪♪♪ female: relations with china and the australian economy along the way may have suffered another hammer blow with unconfirmed reports that beijing has suspended lucrative imports of australian coal. stephen: in october, australian producers were told that coal yet to clear customs would not be allowed into ina. by then, there was already a queue of vessels blocked from

unloading australian coal. paddy crumlin: they're lined up there, and china, for their political reasons, are holding them to ransom to make a point to australia. they can't leave to crew change because they'd lose their spot in the waiting list and the insurance that protects them. stephen: at one stage, 77 ships were stranded off china, with crews effectively imprisoned on the boats. gaurav singh: we are physically and mentally exhausted. we are scared that because of this trade issue, this trade war, god knows when we are going to reach home. paddy: it's an extraordinary tale of a lot of depression. they're away from their families of filipinos and indians. developing countries hit hard by covid.

i mean, it is layer on layer on layer of human tragedy. ♪♪♪ female: australia's lucrative lobster exports could be the next target in the growing trade spat with china. tons of them are sitting at airports across china. the federal government understands they are being inspected for traces of minerals and metals. stephen: at margate, south of hobart in tasmania, the crew of the bold contender are readying the lobster trawler for one more voyage, its last for a while. ♪♪♪ no industry has suffered more from the china trade sanctions than this one. ♪♪♪

brendon: we're just heading into bull bay, back of bruny island, to check our lobster pots this morning. stephen: how many you got there? brendon: we got 50. stephen: brendon taylor has made the journey countless times. brendon: twenty-seven years, i've been involved in the rock lobster industry in tasmania. i was a deckhand for a very long time, and i've been running our family business with the bold contender for 13 years, and this is the toughest time i've ever seen. stephen: until six months ago, the lobster caught here would have been going to china.