For entrepreneurs like Annie Liu, a positive relationship between Beijing and Canberra has a direct impact on the image of her Australian-made products in the Chinese market. Her Sydney-based start-up Visdon, which makes health supplements, relies on exports to China for about 90 per cent of its business. “When Chinese consumers have a feeling that Australia is not a friendly country, they tend to avoid Australian-made products as long as they have a choice,” said Liu, who works as an administrative secretary for the company. Deteriorating trade and diplomatic ties between the two nations have been a source of anxiety for Australian exporters like Liu over the past few years. The most vulnerable sectors are those supplying goods that China can readily source from other countries James Laurenceson Following a series of political disputes , including Canberra’s call for an independent inquiry into the origins of the coronavirus, Beijing imposed a range of trade actions on Australia. Australian exporters have been hit with official and unofficial barriers covering coal, wine, beef, crayfish, log timber and barley. Though the bans have had minimal effect on trade value overall, which remains positive, the figures do not capture the toll on individual businesses, said James Laurenceson, director at Australia-China Relations Institute of University of Technology Sydney. “The most vulnerable sectors are those supplying goods that China can readily source from other countries,” he said. “Many agricultural products are particularly vulnerable to allegations of quarantine and biosecurity violations that are hard for Australians to defend against at forums like the [World Trade Organization].” John Lee, senior fellow at Hudson Institute, an American think tank, said Australia’s education, tourism, wine, seafood and timber exports would continue to suffer under the Chinese bans. Figures from Wine Australia, an Australian government body that regulates the wine industry, showed exports to China declined by 97 per cent last year compared to 2020. The number of exporters shipping wine to China decreased to 208 from 1,988 over the same period. While some sectors have suffered more than others, Australia’s overall exports to China increased 21 per cent year on year to US$133 billion in 2021, according to figures from IHS Markit. Australia’s bilateral trade surplus with the world’s No 2 economy also widened to US$64 billion last year. Despite great appetite, companies on both sides cannot securely develop new trade relationships Jeffrey Wilson China remains Australia’s largest two-way trading partner in goods and services – accounting for nearly a third of its global trade – but political tensions are a barrier for expansion, experts said. Dr Jeffrey Wilson, research director at the Perth USAsia Centre, said the principal barrier to Australia-China trade was Beijing’s campaign of trade coercion . “Despite great appetite, companies on both sides cannot securely develop new trade relationships,” he said. China’s new ambassador to Australia, Xiao Qian , has struck a more conciliatory tone since starting his new job this year, pledging to get relations back on the right track. But deep suspicion remains between the two countries. Dr Dong Jinyue, senior China economist at BBVA Research, said amid rising tensions between China and the US, it was understandable Canberra – a staunch ally of Washington – was rethinking its relationship with Beijing. Australian businesses ‘weren’t naive, irresponsible to rely on China trade’ Exporters are eager to see the governments can make amends, but there is little sign of rapprochement. “There are always going to be disagreements between sovereign nations, even between trade partners and close allies,” said Tony Pearson, CEO of AH Beard, which sells mattresses and pillows to China. “So long as lines of communication remain open, differences can be managed and relationships can improve.” Despite the tensions, his company’s exports to China have grown about 30 per cent over the past two years, a market which now accounts for 5 per cent of total business. Mark Allsop, the CEO of Tasmanian exporter True South Seafood, said he trusted diplomatic efforts would continue to build upon a mutually beneficial relationship. A research brief published by the Australia-China Relations Institute in January said political tensions between Canberra and Beijing would result in fewer opportunities for diplomatic interactions. Laurenceson said Beijing’s trade actions against Australia had harmed its reputation for being a reliable partner, but Australia also wanted to avoid being excluded from China-led economic initiatives in the future. “When China looks around the world to secure its energy supply chains in the future, it is likely to assign suppliers in Australia a higher geopolitical risk premium than previously,” he said. “And there is simply no ministerial level contact taking place that might assist in bringing such deals to fruition anyway.” China bid to fund Australian election candidates foiled, reports say Although Australian companies have been able to diversify to offset bans from China , such as exporting more coal to India, Japan and South Korea last year, challenges remain. Geopolitical disagreements, the global economic slowdown due to the coronavirus and energy constraints remain headwinds for them. Meanwhile, there is a strong bipartisan consensus in Australia regarding its foreign policy settings, including towards China. Analysts believe the upcoming federal election is unlikely to lead to much change . “In the medium term, it is to be hoped that China and Australia can repair bilateral trade ties and improve economic cooperation, particularly since both are members of the RCEP mega trade deal,” said Rajiv Biswas, Asia-Pacific Chief Economist at IHS Markit. “A rapprochement between China and Australia will help strengthen trade liberalisation in the Asia-Pacific region.”