Queensland businesses warned despite signs China trade sanctions may end

Queensland businesses have been issued an ominous warning despite signs that China may be about to end its trade sanctions.

Queensland businesses are being warned that signals China may end its trade sanctions are not a “return to the good old days” and to remember that Beijing can “turn the tap on and off” based on political calculations.

The state’s exports to China increased by $2.6 billion even during the diplomatic deep freeze, trade data shows, amid growing talk sanctions will be lifted this year.

Assistant trade minister Tim Ayres met with his Chinese counterpart Wang Shouwen in Davos for the World Economic Forum on Friday, while Trade Minister Don Farrell is expected hold a virtual meeting with Beijing representatives later this year.

Trade Minister Don Farrell. Picture: Martin Ollman

The resources sector is cautiously optimistic about the coal ban being lifted, while other impacted sectors such as the seafood industry remain braced and declined to comment.

Coal exports dropped to zero in 2021-22, according to Department of Foreign Affairs and Trade data, while beef exports continued to fall.

But aluminium ore remained close to the $1 billion mark, copper reached record highs of $1.699 billion, and wheat and barley showed signs of improvement.

Australian Strategic Policy Institute analyst Fergus Hunter said it showed that even during a time China’s government wanted to punish Australia, there were products it needed and could not acquire elsewhere.

“In using trade-based coercion against countries, China generally uses tactics that will have limited impact on their own economy,” he said.

“The range of restrictions and barriers facing Australian exports, including lobster and barley, may well ease this year as the Chinese government sends positive signals.

“In a way, this will be further evidence — no matter what Chinese officials insist — that they can turn the tap on or off based on their political calculations.”

He said trade-exposed businesses should ensure they keep diversifying to other markets, even if China drops its tariffs and restrictions.

“An important lesson for Australian businesses here is that, even if the tariffs and other restrictions end, that this is not a return to the good old days,” he said.

The flag pole of the Australian Parliament is seen behind the roofs of the Chinese Embassy in Canberra. Picture: AAP Image/Lukas Coch

Australia has ongoing actions before the World Trade Organisation over disputes with China on devastating tariffs it placed on barley and wine, but Mr Farrell said he would be speaking with his counterpart on the matter as soon as practical.

“I’ve made it very clear right from the day I took over this job seven months ago that we would much prefer to sort out these issues with China through discussion and not having to take this arbitration through the World Trade Organisation,” he said.

A DFAT spokeswoman said China’s trade impediments continued to severely affect certain Australian exports to China, but overall demand for the nation’s products remained robust.

“We are aware of reports that China may resume purchasing Australian coal and other products. This would be a welcome step, but we have no confirmation at this stage,” she said.