Australia’s relations with its biggest trading partner China has gone through a downward spiral in recent years. Previous prime ministers made the country the first to formally ban Huawei equipment from its 5G network and barred foreign political donations over concerns of Chinese influence. Relations hit a low point when the Australian government, under then-Prime Minister Scott Morrison, called for an investigation into the origins of the COVID-19 virus.
Beijing’s reaction was also heavy-handed: It imposed tariffs and blocked imports on a range of Australian goods, like wine, barlet and coal.
But ties between the two countries has improved under current Prime Minister Anthony Albanese, who took office in 2022. Over the weekend, China premier Li Qiang said that the relationship is now “back on track after a period of twists and turns.” Li is currently in Australia on a four-day visit, the first by a Chinese premier in seven years.
The Chinese premier arrived in Australia late on Saturday. He met Albanese in Canberra on Monday where the two had a “candid in-depth and fruitful meeting and reached a lot of consensus” according to comments from Li to reporters after the meeting. Li also announced that Beijing will add Australia to its visa-waiver program, which allows a visa-free travel period of 15-days.
Li’s visit follows a trip by Albanese to Beijing in November, the first by an Australian leader in several years.
Icy relations between China and Australia are thawing
Exports of Australian goods to China hit 219 billion Australian dollars ($144.4 billion) in 2023, higher than the $98.4 billion exported in 2019, before the COVID-19 pandemic and the imposition of tariffs according to data from the Australian government.
Since last year, Beijing has gradually lifted its taxes and trade restrictions on goods like barley, beef and wine.
These taxes have hurt Australia’s food producers. For example, Australia exported 1.1 billion Australian dollars ($726 million) of wine to China in 2019. Australian wine made up a quarter of all wine imports at the time. Trade plummetted after Beijing imposed tariffs that reached as high as 200%: Australian wine accounted for just 0.14% of Chinese wine imports in the first six months of 2023.
Yet Beijing continued to buy raw materials from Australia, even as it clamped down on consumer goods. China relies on Australia for goods like iron ore and liquefied natural gas (LNG)
Australia is the world’s largest exporter of iron ore, much of which goes to China. Iron ore exports were worth $19.2 billion and accounted for 62% of Australian exports to China in the first quarter of this year, according to data compiled by ANZ Research.
LNG exports to China, valued at around $3.6 billion, accounted for 12% of Australia’s total exports over the same period.
Australian coal exports also rebounded after Beijing lifted its restrictions on Australian coal last January. Coal shipments, measured in terms of value, surged 118% year-on-year during the first quarter of 2024.
On Sunday, Li promised a more symbolic example of warming ties between Beijing and Canberra. On a visit to the Adelaide Zoo, Li offered to send two new pandas to Australia, replacing the two returning to China later this year.
