A recently held 90-minute virtual meeting between Australia’s Trade and Tourism Minister, Senator Don Farrell, and China’s Minister of Commerce Wang Wentao—the first such bilateral meeting in three years—resulted in an invitation for Australian officials to visit Beijing.
“This was the first meeting of Australian and Chinese Trade Ministers since 2019”, Minister Farrell said.
“Our meeting represents another important step in the stabilisation of Australia’s relations with China. This follows Prime Minister Albanese’s meeting with Chinese President Xi Jinping, and the agreement by Foreign Ministers in December 2022 to restart dialogue in a range of areas, including trade and economic issues.”
Minister Farrell accepted an invitation from Minister Wang to travel to Beijing in the near future to continue the “productive dialogue”.
“Minister Wang and I agreed to enhance dialogue at all levels, including between officials, as a pathway towards the timely and full resumption of trade. Australia looks forward to welcoming Chinese tourists and students back to our shores, as we did with over 1.4 million Chinese visitors in 2019″, Mr Farrell said.
Golden anniversary overshadowed by trade tensions
In 2019, thermal coal and coking coal (used to make steel) became Australia’s second largest export to China, worth more than $14 billion. It was also Australia’s most valuable export for the whole 2018-19 financial year, surpassing iron ore. That same year Australia overtook Qatar as the world’s largest Liquid Natural Gas (LNG) exporter.
In 2020, diplomatic relations between Canberra and Beijing broke down, with China imposing trade restrictions on imports from Australia, including coal. Other sectors most affected by China’s anti-dumping measures included seafood, timber, beef, copper ore, barley, cotton, sugar and wheat. China’s freezing of official dialogue with Australia and hiked up import tariffs led the then Finance Minister Simon Birmingham to accuse China of “economic bullying”.
By late 2020 many ships carrying more than $700 million worth of Australian coal docked stranded off the Chinese coast as unofficial trade restrictions took hold. At the same time, China increased its coal purchases from Canada, Russia, and Mongolia.
By November 2020, China’s Ministry of Commerce (MOFCOM) announced anti-dumping duties of 107-212% on Australian wine exports.
However, research commissioned by AMP Capital firm has found that:
“The impact to the Australian economy from Chinese trade bans has been mild because the value of affected exports is low and as most sectors have been able to find alternative export markets.” Exceptions include wine, timber and seafood industries.”
Re-establishing trust between Beijing and Canberra will take years. In early 2023, Australia was left off the list of countries for the group travel from China—a cohort which used to bring, before 2020, at least 30% of overseas visitors from China annually who would spend at least $10.3 billion locally in Australia.
Whether the recent easing off the coal import restrictions will translate into other areas of bilateral trade activity, remains to be seen in the coming months.