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China’s move to impose big tariffs on Australian wine will disrupt South Australia’s economic recovery from the COVID-19 pandemic, a new report has found.

The SA Centre for Economic Studies said the external environment for South Australia remained challenging with both the global and national economies in recession.

It said employment remained below pre-virus levels and while there had been a strong rebound in recent months, the federal government should rethink moves to end existing support measures.

“Of much greater concern for the state’s economic outlook is China’s recent move to impose massive tariffs on Australian wine,” the centre’s deputy director Steve Whetton said.

“This will cause considerable disruption to the local viticulture and winemaking industries, reducing their production and employment in the short to medium term.”

China accounts for almost half of South Australia’s overseas exports of alcoholic beverages and has been the main source of wine export growth over recent years.

“Taking into account other commodities that have been subject to China’s arbitrary trade barriers, in the order of one-eighth of South Australia’s overseas goods exports could be at risk of China’s trade measures,” Mr Whetton said.

But the report also found some cause for optimism as the recent success with vaccines suggested the pandemic could be overcome.

It said the wider economic recovery would be supported by the increasing normalisation of social activity around Australia while the outlook for the farm sector was quite bullish given favourable seasonal conditions.