Australia-China trade normalisation could take months, if not years: ‘there is no magic wand’

Wariness about the longevity of the diplomatic thaw is one of the factors making a swift return to pre-restriction trade levels unlikely

Officials and exporters also cite competition and a desire to maintain new markets – as well as a potential shortage of Australian customs workers

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A container ship is loaded up at Port Botany in Sydney. Overall, Australian exports to China have surged despite the curbs, but normalising trade in previously restricted items is going to take time. Photo: Bloomberg

Published: 2:32pm, 2 May 2023

More than three years since China first blocked a range of Australian imports in a political dispute, restrictions are easing, but reviving trade is proving more challenging than stopping it in the first place.

A leaders’ meeting late last year set off a thaw in relations that saw China relax restrictions on coal in January. But three months on, in March, coal imports were still one-third the 2016-2019 average.

Bureaucratic inertia meant word took weeks to filter to Chinese customs officials, say traders, who had to visit eight government departments to sort permits. In February, Australia was still not in the import licence computer system, according to buyers.

The economics have also worsened. Australian miners have found new customers in the interim and no longer offer concessional prices on coking coal. Meanwhile, cheaper imports from Russia and Mongolia have taken market share in China.

Coal waiting to be loaded onto ships at the Port of Brisbane. Australian miners have found new customers since China imposed restrictions on coal imports. Photo: Reuters

“These things take time, there is no magic wand to bring everything back to normal, it will be a slow process over several months,” said David Olsson, chair of the Australia China Business Council.