China-Australia trade disputes could be resolved as China reveals plan

Beijing is willing to accept a “package resolution” to end a trade dispute with Australia, says China’s Ministry of Commerce. But it hasn’t detailed what that package must be. Or has it?

Ministry (MOFCOM) spokesman He Yadong told State-controlled media this week that China “stands ready to work with Australia” to “enhance mutual trust and co-operation”. All while “fully accommodating” each other’s concerns.

Prime Minister Anthony Albanese earlier this month accepted an invitation to visit Chairman Xi Jinping in Beijing. A date is yet to be confirmed.

At the top of the agenda will be an end to Chinese punitive tariffs on Australian wine and seafood.

Early this year, Beijing lifted its bans against Australian coal after a national shortage caused widespread blackouts. In August, an 80 per cent tariff choking Australian barley exports was lifted after drought and intense storms swept across China’s food belt.

Now He Yadong says Beijing is willing to work on “a package solution” to restore access to Australia’s remaining sanctioned industries.

But what price will Albanese have to pay?

He Yadong pointed to Australian restrictions on the imports of wind towers, railway wheels and stainless steel sinks and “inappropriate practices in Canberra’s trade remedy investigations against China”.

He did not detail what those “inappropriate” practices were.

“China and Australia are both members of the WTO (World Trade Organisation) and share the responsibility of maintaining the rules-based multilateral trading system. China is also open to continuing to resolve the issues through multilateral channels,” he said.

However, international affairs analysts argue China’s concerns are more ideological and diplomatic than economic. And Beijing makes little effort to sustain its quality-control cover story.

Former diplomat at China’s Consulate-General in Sydney Zhou Xiaoming says Canberra’s willingness to contradict Beijing publicly was behind the punitive trade moves.

“Since 2017, the Australian government has started to challenge China,” the senior fellow at the Centre for China and Globalisation in Beijing stated this week in an editorial of the Communist Party Controlled South China Morning Post. “Prime Minister Anthony Albanese’s government, since taking office in May last year, has adopted a more pragmatic approach. As a result, bilateral ties are showing signs of improvement.”

The language of coercion

In November 2020, China issued a list of 14 “grievances” against Australia. Only addressing these “would be conducive to a better atmosphere”, an embassy official said at the time.

The dossier accused Canberra of “poisoning bilateral relations”.

Using Covid-19 for “political manipulation”.

Using national security as a trade-protection “excuse”.

It complained that Australian media was “unfriendly or antagonistic”.

Think think-tanks “repeatedly made mistakes”.

Security agencies were “slandering” and “stigmatising” Beijing.

There’s little public sign of its willingness to backtrack from these complaints.

“For Australia and China to enjoy stable and lasting relations, it would require a fundamental shift in Australia’s perception of China’s strategic orientation,” writes Zhou. “When the suspicion surrounding China is dispelled, Australia should see China’s economic development as an opportunity, rather than a threat.”

Pragmatic opportunity, however, may be forcing Beijing’s hand.

Just as domestic problems forced it to lift embargoes on coal and barley, the effects of ongoing extreme weather events are producing food shortages that can only be met via international trade.

The grain-producing northeastern region of China is suffering reduced yields after intense storms in recent months. But that’s just one example of the impact of the hottest year in the Northern Hemisphere’s history. And those shortfalls can only be countered through extra imports.

But obedience is the basic foodstuff of the Chinese Communist Party’s survival. And it’s not likely to accept being seen to back down on its international demands.

“As Albanese heads for Beijing later this year, he would be well advised to fill in the missing link – an accurate conception of China’s strategic intentions, and Australia’s strategic autonomy,” Zhou asserts. “In so doing, he would be doing a great service not just for bilateral ties, but also for Australian prosperity and peace in the region.”

Food for thought

China’s imports of Australian high-grade thermal coal rose to 6.7 million tons in August. That’s the highest level since 2020 and represents a significant turnaround in the soured trade relations between the two states.

Behind the move is a need to restore electricity supply stability, fuel steelmaking plants – and offset China’s fall in domestic supplies.

And exports of Australia’s agricultural produce – even with Beijing’s bans – have reached a new record high of $16.6 billion.

But does Beijing want to buy Australia’s compliance as part of a trade “package deal”?

“An Australia serving as a foot soldier in the US geopolitical campaign can’t realistically expect business as usual with China; how many of us could be enthusiastic about doing business with a hostile party?” Zhou writes. “Given that Australia enjoys a huge trade surplus with China (US$60 billion in 2021 alone), for China to be helping Australian exports grow would be akin to loading the opponent’s gun.”

But Australia’s alliances and friendships go beyond Washington.

It also has historic diplomatic, defence and trade relationships with the likes of India, Malaysia, The Philippines, Japan and Indonesia. And these nations are having to contend with Beijing’s expansive border ambitions.

Zhou, however, is sticking to Beijing’s talking points. “For a structural change in the relationship, it is also crucial for Australia to have an independent foreign policy, reflecting Australia’s own strategic interest. It is no secret that the US means to contain China, and is getting its allies, including Australia, to fall in line.”

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