China brings out its politics playbook on trade

Soybeans, barley and meat tell a political story right now.

China is accelerating purchases of soybeans from the U.S., a move that ticks a box with Washington. Top trade negotiators from China and the U.S. spoke last week and agreed to do better on implementing the deal to end last year’s trade war.

China will also exempt further tariffs on U.S. aircraft radar as part of a list of 79 items released today.

Beijing and the U.S. are arguing over the coronavirus pandemic. But after a tense few weeks, President Donald Trump may start to soften his accusations against China about the origins of the outbreak. With both economies suffering, there’s an incentive, even briefly, to prevent the trade agreement from becoming a casualty in a broader political fight.

No such gestures for Down Under, though. China is unleashing its trade clout against Australia, irritated by Prime Minister Scott Morrison’s calls for an independent probe into the pandemic’s origins.

Beijing has suspended meat imports from four abattoirs. Australia also faces the threat of major tariffs on barley shipments to China. Those developments are weighing on the Australian dollar, because China is the country’s biggest trading partner.

It’s a classic play by Beijing that Australia has weathered before. But with the country’s economy also hit by virus lockdowns, there’s less wiggle room for Morrison. In a game of political chicken, it’s often trade that blinks first.