It's a hit in China.

Every third bottle.

The Chinese import comes from an Australian vineyard last year that added up to €800 million worth of wine.

But this year the numbers are set to dry up as China is putting stiff tariffs on Aussie wine.

The official reason.

China accuses the Australian government off subsidizing the vineyards, thus allowing their product to be sold cheaper, undermining the Chinese market that, according to Beijing, made it impossible for Chinese winters to establish and grow their own business.

The Australian government disagrees.

It is of great concern that China has taken this action.

It is an action that comes on top off an accumulation off other actions during the course off this year in particular.

In fact, Beijing has previously Levitt import taxes on Australian barley and has hindered or stopped imports of Australian coal and beef.

To many, it seems that Beijing is retaliating after Australia criticized the country for the coronavirus outbreak and demanded an investigation.

Chinese officials have previously stated their anger.

200.

What's the We have said on many occasions that Australia has repeatedly taken wrong words and deeds on issues involving China's core interests and major concerns taking provocative and confrontational actions.

Things is the root cause of the current difficult situation in China Australia relations.

Beijing has authored a 14 point memo explaining to Australia how to behave in order to have more successful trade relations.

It includes no more criticism of China with regards to cove it as well as support for China's embattled telecom equipment maker Huawei.

Australia finds itself between a rock and a hard place after all, 40% of the country's exports are to China.

Let's dig a little deeper into the story with Clifford Coonan from D W Business Clifford Good to have you um, China says it's introducing these tariffs to protect their domestic market and because, you know Australian wine has been illegally subsidized.

That's what Beijing says.

But that's not the whole story is no.

I think in in recent years we've become used to socialism with Chinese characteristics, on capitalism, with Chinese characteristics, and now I think we're getting a taste of globalization on free trade with Chinese characteristics.

I think what they're doing is they're putting pressure on on Australia.

Um, it's political on.

The political always outweighs the financial when it comes to China.

I think protecting the Chinese wine industry, which is very small, is, uh is not something that you would you know.

It doesn't really make add up when you consider how much Australian wine goes in.

Andi, I think it's definitely a political thing rather than economic thing.

Three.

You and China are currently working on a trade agreement.

Does this have any impact that spat between China and Australia on these negotiations with Europe?

Well, it's interesting.

The EU Parliament has just given has given us permission for these to continue now.

Toe, actually, go ahead and sign this.

Things packed.

One thing the Australian said today that it was that doing the trading with China is risky on.

I think what this is is a warning that the you can't go sort of hell for leather into into a free trade deal when clearly, um, it's not as free trade as it appears.

Thio advertise itself and that they need Thio to really consider about what terms they're gonna be required to provide goods to China, Australia and China.

China have a free trade agreement, strong trade ties, as we've seen in the report.

Both are part of the freshly signed R C E P trade deal for Asia.

Um, what do the terrorists mean for these existing agreements?

Well, it was interesting.

I was talking to a trade lawyer, and they were saying that when when trade deals don't work, they stay in place.

It's It's more about how they actually try and build Mawr trade, so it won't directly affect these things.

But it's certainly going to make people think about how what they're doing, letting China have such a big role in these free trade deals.

On the one hand, it's calling for globalization and firm or openness.

But at the same time, it's doing what's clearly very protectionist measures against Australia over its comments on Xinjiang and other aspect.

So I think I think it won't directly affect them, but it will certainly make them look a lot less attractive on going forward.

I think it will make the whole notion of signing up for big trade deals a lot less appealing than it has to date.

Clifford Coonan from D w.