Australia eyes exports boon amid bilateral thaw

Australian exporters are bracing for a rush of new orders as relations between the country and China are expected to return to a normal track.

The latest encouragement of warming bilateral relations came from Chinese Ambassador to Australia Xiao Qian during a 90-minute news conference in Canberra on Jan 10.

With the Year of the Rabbit only days away, he told journalists that the rabbit traditionally meant good luck and overcoming obstacles.

He lauded the Labor government of Anthony Albanese, which came to power last year, saying it offered an opportunity for a reset in relations between the two countries.

Xiao said 2022 had been an extraordinary year for bilateral relations and the resumption of communications meant the countries could begin to turn a badly degraded relationship toward what has been the norm of recent decades.

Best interests

“We have different views, but there’s no reason for us to be confrontational in nature,” Xiao said. “That’s the basic idea guiding our relationship.”

Ties between Australia and China deteriorated under the previous government in Canberra, affecting some A$20 billion ($13.9 billion) worth of Australian exports to China.

There has been a flurry of diplomatic exchanges between Australia and China since the thawing of relations.

The Australian government said the resumption of normal trade across the board would be in “both countries’ best interests”.

David Olsson, president and chair of the Australia China Business Council, told China Daily that he expects to see a pickup in commercial activity between Australia and China in time.

“There is pent-up demand from Australian exporters to resume travel to China to meet with local partners, distributors and manufacturers, many of whom they have not seen for three years,” he said.

Businesses and the Albanese government expect any relaxation of Chinese trade sanctions to be done incrementally and without fanfare, Olsson said.

Professor Caitlin Byrne, director of the Griffith Asia Institute and pro vice-chancellor (business) at Griffith University, said there has been no date for normalizing some Australian exports to China.

Some reports have suggested resumption of trade may take place in the second quarter of 2023.

But without any confirmation, we “will just have to wait and see”, Byrne said.

Ian Macfarlane, chief executive of the Queensland Resources Council, told The Guardian Australia on Jan 5 that the coal industry would “welcome any easing of restrictions and would be keen to tap any revived export opportunities”.

Byrne said it is important to note that these reports are unofficial at this stage and relate only to a partial resumption of trade.

Australia used to be China’s second-largest coal exporter. Australia exported 92.1 million metric tons of thermal and coking coal to China in 2019, S&P Global data showed. The exports fell to 70.6 million tons in 2020.

Recent global conditions have seen Australian coal suppliers find alternative markets, including in India, to offset the impact of Chinese restrictions that came into effect in 2020. “So, it won’t necessarily be a matter of resuming the import of Australian coal at the same rate” as previously, Byrne said.

Although China is set to reimpose import tariffs on various coal grades from April 1 after it temporarily removed duties for a year until March 31, 2023, Australian coal products can still be attractive to Chinese buyers.

karlwilson@chinadailyapac.com