China’s protracted release of Australian trade leaves a bad taste

To remove the restrictions on Aussie wine, Australia has had to strike the same deal it did to get the restrictions on barley lifted early this year and withdraw its appeal to the World Trade Organisation, in return for an “expedited review” that will take around five months.

This face-saving arrangement spares China the embarrassment of an adverse ruling by the WTO umpire for breaching the global trade rules that have underpinned its remarkable export-led economic growth over the past two decades.

There are still restrictions on Australian rock lobster to go. And the trade bans that hurt ordinary Chinese consumers and consumption ignored key production inputs into the Chinese economy, such as Australia’s iron ore exports.

Still, it is a step back from the wolf warrior aggression that marked China’s response to Australia’s legitimate security concerns – shared by similar Western economies – about a Chinese company’s involvement in Australia’s 5G telecommunications network build.

Yet Beijing’s determination to cut a bilateral “package deal” to resolve bilateral trade disputes is an unfortunate exercise that cuts across the spirit of the rules-based multilateral trading system, which has benefited both Australia and China so much.

That Australia’s total exports to China continued to expand amid the trade sanctions underlines the complementarity of the two countries’ economies that has so benefited both sides over the past two decades.

It’s positive that Australia is removing unnecessary irritants in the relationship – such as the review that has cleared the Chinese ownership of the Port of Darwin, agreed to under the previous Coalition government, as not a strategic risk.

Australia still needs to clarify its attitude to Chinese investment in Australia, such as the bans on buying local dairy producers.

Australia has also benefited from early-stage Chinese investment in lithium mining and now needs to work through this, running into geosecurity concerns around China’s involvement in critical mineral and energy transition supply chains.

China will seek to use the symbolism of Mr Albanese’s visit – less than a week after meeting with US President Joe Biden in Washington – to set the platform for the relationship for the next 50 years. But the starting point must be ending China’s economic coercion of Australia.

That said, Australia should also eliminate its seemingly hypocritical anti-dumping tariffs against Chinese steel products, which China has also hypocritically taken to the WTO.

Along with having all the hallmarks of classic Fortress Australia protectionism, imposing tariffs on cheaper China-made kitchen sinks, railway wheels and wind towers is an act of economic self-harm amid the challenging energy transition already being made increasingly costly by global competition and supply chain disruptions.

That would also be consistent with what remains Australia’s overall national interest in supporting China’s continued rise, amid its structural ageing, debt build-up and spluttering recovery from the pandemic, as part of a rules-based international system.

Amid the coercion, Australia has by-and-large stuck to this reasonable national interest after Beijing effectively held the bilateral trade relationship hostage – an act that leaves a lingering bad taste.