China envoy Xiao Qian hints at trade peace

Improved political ties could pave the way for an end to trade disputes between Australia and China worth as much as $20bn a year, China’s ambassador to Australia says.

Ambassador Xiao Qian at the Chinese Embassy in Canberra on Tuesday. Picture: NCA NewsWire / Gary Ramage

Improved political ties could pave the way for an end to trade disputes between Australia and China worth as much as $20bn a year, China’s ambassador to Australia, Xiao Qian, said on Tuesday, including a possible end to tariffs on Australian wine and barley.

Mr Xiao said there was potential for Australia’s two major trade disputes with China, on wine and barley, to be resolved on a bilateral basis that could involve dropping actions under way in the World Trade Organisation.

He said improved political ties could also open the door for Chinese buyers to resume buying Australian goods including coal, with the end of Covid restrictions also clearing a path for a resumption of Chinese tourism to Australia.

Deteriorating political ties have led to a range of trade disputes with Australia’s largest trading partner, including the imposition of tariffs on wine and barley and non-tariff action against imports of Australian coal, beef, lobster and timber.

Our once thriving barley trade to China was hit by tariffs of 80 per cent in an anti-dumping action followed by the imposition of tariffs of around 200 per cent in March 2021, which stopped a $1bn trade in Australian wine exports to China.

Mr Xiao said there was now a “new consensus” between Australia and China about their relationship, which provided an opportunity to “address trade disputes in a constructive manner”.

“I hope both sides will show goodwill and sincerity,” he said. “‘The Chinese side is ready to discuss matters with the Australian side.”

Mr Xiao said there were already discussions at the World Trade Organisation about a possible move to resolve the wine and barley issues on a bilateral basis, which he said would be a lot easier to resolve than a lengthy procedure through the WTO.

But he indicated he would be watching closely the treatment of Chinese companies operating here. He said the relationship between Australia and China was “important for both sides”. The past five years under the previous government have seen “difficulties affecting the relationship”.

“Trade relations is one of those areas,” he said. “I hope, as relations improve, that we would come back to a normal relationship.”

While not confirming reports there had been a change of heart in Beijing, with Chinese coal buyers being encouraged to resume buying Australian coal, he said businesses “might be hesitant to continue a trading relationship” if there were political tensions. But if relations were coming back to normal they might be “more confident” in resuming trade.

He said the meeting between Xi Jinping and Anthony Albanese in Bali in November had been “positive, constructive and productive”, and had set the tone for improved relations in the future. He said Australia and China should “not allow differences to hijack the relationship”, which has just marked the 50th anniversary of political ties between Canberra and Beijing.

He said Australian Foreign Minister Penny Wong and Chinese Foreign Minister Wang Yi had “laid out a road map to implement consensus” between the two countries that would see a resumption of bilateral dialogue.

Australian Trade Minister Don Farrell is due to visit China later this year, followed by a possible visit to Beijing by Mr Albanese.