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Australian Trade and Tourism Minister Don Farrell with Chinese Minister of Commerce Wang Wentao in Beijing in May. Photo: DFAT via AP)

Economy Global Economy

Explainer | China-Australia trade: what’s the state of relations after 3 years of ups and downs?

Relations soured in 2020 after Canberra asked for a probe into the origin of the coronavirus and Beijing fired back with unofficial bans on Australian products
But the tide appears to have turned, with two recent trade-minister meetings and a relaxation of import curbs

China-Australia relations

Andrew Mullen

Published: 4:00am, 3 Jun 2023

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After no in-person talks since 2019, the trade ministers from China and Australia met twice in May, highlighting how relations between Beijing and Canberra continue to thaw after years of frosty diplomatic wrangling.

Australian Minister for Trade and Tourism Don Farrell first travelled to Beijing for a meeting with Chinese counterpart Wang Wentao on May 12 before the pair reunited in the US city of Detroit during an Asia-Pacific Economic Cooperation (Apec) meeting later in the month.

Relations between China and Australia turned sour in 2020 after the then-Morrison administration asked for a probe into the origin of the coronavirus with other world leaders.

01:47

Australian trade minister visits China, 'hopeful' for trade resolution

Beijing responded with unofficial bans on Australian products, including lobsters, coal, cotton and logs, while it also imposed official import tariffs on wine and barley.

Relations have since improved, starting with a meeting between President Xi Jinping and new Australian Prime Minister Anthony Albanese in November on the sidelines of the G20 meeting in Indonesia.

But what is the state of play in relations between Australia and its largest trading partner?

Wine

China officially imposed duties of between 116.2 per cent and 218.4 per cent on Australian wines in containers of up to two litres in March 2021 after concluding anti-dumping investigations.

The duties – higher than the preliminary tariffs – were due to be applied for five years, after the Chinese commerce ministry reiterated a decision made in November 2020 that the domestic wine industry had been hurt by the dumping of cheap Australian wine.

Canberra lodged a formal complaint with the World Trade Organization (WTO) over China’s imposition of anti-dumping duties on Australian wine exports in June 2021.

01:55

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It is believed that Australia has asked for the tariffs on wine to be removed in full, or returned to the previous pre-sanction levels, before Australia will drop its WTO investigations.

In October, Wine Australia said Australian wine exports to China plunged by 92 per cent to A$21 million (US$13 million) in the year ended September 30.

Barley

China’s commerce ministry said in mid-April that it would review the necessity of continuing to impose anti-dumping and anti-subsidy tariffs on imported Australian barley, with the survey to be completed within a year.

Days before, Australian foreign minister Penny Wong said Australia would suspend its WTO case after China’s tariffs of 80.5 per cent on Australian barley all but wiped out imports of the grain by the world’s biggest beer market. Australia submitted its formal complaint to the WTO in 2020.

01:26

China, Australia reach deal to resolve barley tariff dispute as Canberra suspends WTO case

At the start of June, Farrell said that China’s review into the tariffs was heading in the “right direction” and that the process was “close to completed”.

Before the tariffs, trade had ranged between A$1.5 billion (US$1 billion) and A$2 billion a year.

Lobsters

Australian lobsters were caught up in the unofficial bans after Canberra called for an international inquiry into the origin of Covid-19 in 2020.

Since November 2020, legal imports of live Australian rock lobsters into China have fallen to virtually zero.

In 2019, before the ban was put in place, more than 90 per cent of Australian rock lobsters were exported to China, and figures from the Australian agriculture department showed that the market was worth about A$750 million (US$517 million) a year.

01:01

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Australia has diversified lobster exports to Hong Kong and Vietnam, though some have entered the Chinese market via grey channels.

It was reported in early 2023 that China was discussing customs clearance for Australian lobsters.

Coal

Coal was another commodity caught up in the unofficial bans after Canberra called for an international inquiry into the origin of Covid-19 in 2020.

In March 2020 – before China’s unofficial ban on Australian coal – imports of coking coal had reached 4.36 million tonnes, while 5.65 million tonnes of thermal coal entered the Chinese market, according to official data.

02:48

Chinese firms must decide whether to import coal ‘on their own’: China’s ambassador to Australia

China’s state planner, the National Development and Reform Commission, was reported to have held talks with four state-owned importers in January this year over a partial lifting of the verbal ban on Australian thermal and coking coal.

In March, China’s coking coal purchase from Australia quadrupled from the previous month, while thermal coal imports rose fourteenfold.

Cotton

Once the biggest market for Australian cotton, the A$900 million (US$621 million) trade ground to a halt in late 2020 after China imposed a series of official and unofficial restrictions.

China imported 20,000 tonnes of Australian cotton in 2022, compared with 400,000 in 2019, according to Chinese customs data.

But it was reported in February this year that Chinese buyers were buying up Australian cotton, and that it was being shipped to a bonded warehouse in Qingdao and possibly one other location.

China’s foreign minister to visit Australia in July for ‘reciprocal visit’

Logs/timber

Chinese ambassador Xiao Qian said in May – days after Australian trade minister Farrell returned from a trip to Beijing – that China would resume imports of Australian timber.

The once A$600 million (US$399 million) annual timber trade with China had been largely suspended since late 2020 after Beijing said it had found pests in shipments coming from several Australian ports.

What is the outlook for China-Australia relations?

The Post reported in May that China’s foreign minister, Qin Gang, may visit Australia in July.

The expected trip to Canberra would follow a meeting between Australian foreign minister Wong and Qin’s predecessor, Wang Yi, in December.

Wang also accepted an invitation from Farrell to visit Australia, during their meeting in Beijing in May.