Australian exporters rekindle China ties amid diplomatic thaw

Essential Metals

26/02/2023 20:00

By Lewis Jackson
       SYDNEY, Feb 27 (Reuters) - Two and a half years after
Chinese trade restrictions hit Australian products from coal to
wine, a diplomatic thaw between Beijing and Canberra has raised
hopes for a revival of exports and spurred businesses to take
steps to rebuild ties.
    First imposed by China in 2020 after years of disputes over
Huawei, espionage and COVID, a raft of official and unofficial
"trade blockages" worth roughly A$20 billion ($14 billion) are
showing signs of loosening under a concerted diplomatic effort
that has seen the leaders, foreign ministers and trade ministers
of both countries meet since November.
    Australian business leaders are following the political
signals. Fortescue Metals  FMG.AX  founder Andrew Forrest, BHP
 BHP.AX  head Mike Henry and Tim Ford, chief executive of
tariff-hit winemaker Treasury Wine Estate  TWE.AX , have
scheduled visits to China in March.
    The head of the Australian Forest Products Association said
that Australian agriculture officials recently started
"encouraging" talks with Chinese customs over log imports, once
a A$600 million-a-year trade.
    "We're optimistic that in the near future - could be three
months, could be six months - we might see a resumption in
trade," the association's chief executive, Victor Violante, told
Reuters.
    At least 15 vessels carrying Australian coal were bound for
China last week as traders bet already-reduced trade barriers
will fall further. Chinese cotton buyers are importing
Australian product in anticipation an unofficial ban will lift.
    An end to trade restrictions would mark an early success in
Australia's effort to repair trade links with China even as it
deepens security ties with the United States and United Kingdom
through the AUKUS nuclear submarine alliance.
    However differences over national security, human rights and
other issues mean the journey to refreshed trade relations could
be tentative and bumpy. Australia is expected to announce in
March further details about the nuclear submarines it plans to
buy, a move Beijing opposes. 
    Both countries remain locked in a formal World Trade
Organisation dispute process over Chinese anti-dumping tariffs
on barley. A report is due by March.
    Nevertheless, Long Dingbin, China's top diplomat in Western
Australia, a huge exporter of grains, iron ore and natural gas,
met with state Premier Mark McGowan on Wednesday. McGowan hopes
to go to China very soon, in what would be his fifth visit in
office, the Chinese consulate in Perth said.
    Long has attended at least eight events in February, meeting
politicians and business groups, including a Chinese New Year
party attended by more than 350 politicians and business
leaders.
    "People are starting to get on the front foot," Grain Trade
Australia Chief Executive Pat O'Shannassy told Reuters. "Trade
is ultimately about relationship and people are getting those
relationships in place." 
    Capital is tentatively moving, too. Chinese buyers are
looking at Australian assets, although Tianqi Lithium's
 002466.SZ  $136 million bid for Australian lithium developer
Essential Metals  ESS.AX  will test regulator appetite for
investment in areas considered important for national security.
    Prime Minister Anthony Albanese on Wednesday said Australia
would consider the merits of any deal but he was "conscious
about Australia's sovereign capabilities".    
    Traders are cautious about possible bureaucratic delays. A
shipment of Australian coal diverted to Vietnam last week after
waiting at a Chinese port for five days without unloading.
    " The  government's attitude remains ambiguous and the
bureaucratic proccess is opaque, even though the general
consensus is that the rule is relaxing since last Friday," said
a Chinese coal trader who declined to be named.
    Even should trade resume, many producers plan to avoid
becoming too reliant on China again.
    Albanese travels to India next month with his trade and
resources ministers and a big business delegation in tow.
    The chief executive of Cattle Australia, David Foote, said
producers cut off from China had spent more than two years
finding new customers and would be loath to give them up.
    "They'll want to add China back in but not at the offset of
losing their new customers."    
($1 = 1.4684 Australian dollars)
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Chinese trade barriers hit many Australian exporters hard    https://tmsnrt.rs/3IQNFuP
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Lewis Jackson. Additional reporting by Dominique
Patton in Beijing and Muyu Xu in Singapore; Editing by Sonali
Paul)
 ((lewis.jackson@thomsonreuters.com; Reuters Messaging:
@lewjackk))