By Lewis Jackson and Muyu Xu
SYDNEY- 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 a 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 license computer system, say 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.
“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.
Relations between China and Australia first soured in 2017 when Canberra voiced concern over China’s militarisation of disputed islands in the South China Sea and introduced laws criminalising foreign interference that were seen as aimed at Beijing.
After Australia called for an inquiry into the origins of COVID-19, China responded with trade curbs in 2020 that throttled roughly A$17 billion of Australian imports from coal to timber.
The sluggish resumption of the coal trade suggests that reviving the markets, logistics and expectations that greased trade in restricted products could take months if not years.
Overall, however, Australian exports to China have surged despite the curbs, rising to A$175 billion last year from A$149 billion in 2019 in large part thanks to a booming iron ore trade too vital for China’s steel mills to risk disrupting.
The centre-left Labor government has made the restoration of unrestricted trade a priority and the end of coal restrictions were an early win. Foreign Minister Penny Wong travelled to Beijing in December and the trade minister is expected within weeks to make the same trip.
Last month, the countries agreed to resolve within three months a World Trade Organisation dispute over Chinese barley tariffs. Australia’s trade minister is confident wine tariffs will follow.
One issue is a potential shortage of the Australian customs workers who certify cargoes for export. Many left when the now restricted timber log trade vanished overnight, said Frank Rudkiewicz, who is an “authorised officer” (AO) certified by the Agriculture Department to inspect export cargoes.
“There was so much work guaranteed and then overnight it all fell through,” he said.
He was recently flown to Townsville from South Australia, roughly 1,800 kilometres north, to certify a consignment of grains because no one else was available. – Reuters
