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China and Australia: How Coal Shipments Resumed After Two Years of Tension

China’s trade relations with Australia showed concrete signs of thawing with coal shipments resuming after more than two years, and hopes of a return of lobster and wine sales.

Bulk carrier Magic Eclipse was anchored off the southern port city of Zhanjiang on Thursday morning, according to Bloomberg shipping data. It’s carrying metallurgical coal mined in Australia that’s destined for the Chinese market. Zhanjiang is a center for steel production in China.

Separately, Australia’s trade minister raised hopes that the lobster trade with China could restart within months, while China’s commerce ministry said it was willing to discuss tariffs that it imposed on Australian wine following a diplomatic dispute that began in 2020.

Australia’s government welcomes “any step towards resolving the trade impediments,” Trade Minister Don Farrell said in a statement Thursday. 

Farrell told the Australian Broadcasting Corp. that Beijing had not rejected a recent application by Australia for fresh lobster exports to China. It was the first time since 2020 that the application had not been swiftly rejected, the broadcaster added.

China placed informal restrictions on the use of Australian coal in 2020, after then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19 in Wuhan that year. 

The punitive trade actions mandated by Beijing extended to lucrative agricultural exports including wine, barley and lobsters. Australia’s overall exports to China continued to grow despite the tariffs, partly due to a rise in iron ore prices.

China is Australia’s largest trading partner. However, Canberra is a close ally of Washington on security issues, which often led to tensions with Beijing during the past decade.

Diplomatic relations between the two countries steadily improved following the election of a center-left Labor government in Australia in May. Chinese Commerce Minister Wang Wentao met with his counterpart Farrell on Monday for the first bilateral trade talks in more than two years.

The two ministers agreed to “enhance dialogue” with the aim of ensuring “the timely and full resumption of trade.” 

A second coal shipment from Australia is expected to dock in China later this month, solidifying the renewed trading relationship. Still Canberra remains concerned about China’s security impact on the region, and retains tight controls on Chinese investment.

Australia’s defense department will remove all surveillance technology manufactured by Chinese companies Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. from its premises, making it latest US-ally to crack down on the technology giants.