Domestic dairy producers despair amid import surge

Related: Chinese industries influenced by Sino-Australia FTA

While China finalized negotiations with Australia on a landmark free trade agreement, after nearly a decade of talks, it is still in the process of striking similar deals with other countries.

The Sino-Australian FTA could show how similar agreements would bring long-lasting effects to participating countries. Let's take a look at which industries in China would be affected.

Dairy industry

According to the FTA, China will levy zero tariffs on dairy products from Australia in four years' time while the current rate is 10 to 15 percent.

Wang Dingmian, a dairy expert, told 21st Century Business Herald that the zero-tariff treatment will have "some" influence on China's domestic dairy industry, but it will not be "very large" because the volume China imports from Australia is small and the price of Australian dairy products does not have an advantage over those of New Zealand, which is the largest source of China's dairy imports.

According to statistics of the General Administration of Customs of China, the country imported 30,267.82 tons of milk power from Australia, accounting for just 3.72 percent of all imports.

However, discussion has already begun on whether zero-tariff treatment will usher in price cuts for imported dairy products or whether the move will disadvantage China's high-end dairy products makers. There are also voices that say the move will encourage Chinese companies to invest in the Australian dairy industry.

China's New Hope Group announced on Nov 18 that the company will invest A$500 million in Australia's agriculture and food industry, including the dairy industry.

 

Dairy cows in the Inner Mongolia autonomous region, China on Sept 14, 2014. [Photo/IC]