Australian Prime Minister Albanese will meet with Chinese officials in the coming days.
Rhiannon Hoyle
November 6, 2023
When China reopened its ports to Australia for steelmaking coal in January this year, it quickly encountered a problem: most Australian coal transport ships did not reappear in Chinese ports. This is the aftermath of two years of stalemate in trade relations between China and its main trading partner, Australia.
Previously, because former Australian Prime Minister Scott Morrison called on the international community to investigate the origin of COVID-19, Chinese leaders made an angry response, so Australian coal exporters were rejected by China and had to rush to open new markets. Many companies have turned to India, which needs coal to meet its booming steel industry. Even if the Chinese government lifts these restrictions, the trade relationship between Australian coal exporters and India can still be maintained.
Last Saturday, Australian Prime Minister Anthony Albanese went to China, marking the first visit by an Australian leader to China since the rift in diplomatic relations between the two countries.  
However, the experience of steelmaking coal exporters and other industries targeted by China's tariff and other restrictive measures indicates that Albanese faces a daunting task and that the trade relationship between China and Australia has suffered sustained damage. For example, more of China's steelmaking coal now comes from Mongolia and Russia. After Western countries banned the import of Russian coal due to the Ukrainian war, Russia changed the direction of some of its supply.
At present, Australia's exports to China account for slightly over 37% of its total exports, a significant decrease from the proportion of about 45% in 2021. Some economists believe that part of the reason is the weak recovery momentum of China's economy from the COVID-19 epidemic. But they believe that this may also reflect the unwillingness of Australian exporters to make significant bets again on a country prepared to use economic coercion. Despite recent improvements in Sino Australian relations, tensions still persist, including the expanding military alliance between Australia and the United States, as well as China's detention of Australian blogger and spy novelist Yang Hengjun.
Shane Oliver, Chief Economist of AMP Capital, an Australian investment management company, said, "Australian producers may be wary of relying too heavily on China again
Since the rift in diplomatic relations between China and Australia, the composition of China's imports has changed.
For some industries, returning to the old path of 'everything remains the same' is not a simple choice, despite the large size of the Chinese market and the willingness to pay a premium for Australian products. Establishing a new supply chain far from China requires time and money.
Cotton growers have recently shipped as much cotton to Vietnam as to China, which was their largest market until the unofficial ban that began in 2020. Against the backdrop of deteriorating Sino Australian relations, barley growers have been hit by punitive tariffs, but they have found new markets such as Saudi Arabia. In the past year, the total export value of Australian wine to China was less than 5 million US dollars, while during its peak period it reached 770 million US dollars. The sharp decrease was due to China's imposition of skyrocketing tariffs on this product; Last month, China stated that it would reconsider the tariff.
Some companies will return to China and attach great importance to the market, "said Australian Grape& Lee McLean, CEO of Wine, said. However, I have already talked to other companies that are not in a hurry to return
For grape growers and wine makers, abandoning the Chinese market will come at a high cost. At present, the annual export value of Australian wine is about 1.2 billion Australian dollars, lower than the 1.9 billion Australian dollars before China imposed the above-mentioned tariffs. The overall export volume has significantly decreased, and the average selling price of each bottle of wine is lower than in the past.
McLean said that no country or market cluster can replace Australia's lost business dealings with China. However, he said that exporters have achieved some success in expanding trade with Japan, especially in high priced wines, and sales to Southeast Asia are also growing rapidly.
After the imposition of customs duties in 2020, Chinese tariffs affected the Australian grain industry.
The reality is that many of these things require time, investment, and considerable courage and determination, "McLean said. Companies in relevant markets need to go door-to-door, wear out shoe soles, and try to expand these markets
For some brewers, Australia's trade with China's Waterloo has also brought some comfort. This situation has prompted brewers to reflect on whether the industry has become overly reliant on a particular market.
Jeffrey Grosset, founder of Grosset Wines in Clare Valley, South Australia, said, "The collapse of Australia China trade is indeed cruel, but to some extent, perhaps looking back now, it can also be considered a favor for us." The Valley is famous for its white wine production.
But many brewers say they are not worried about going back to the past.
Angove Family Winemakers, founded in 1886, once stored a large amount of wine with Chinese labels in a warehouse; After the Chinese government imposed temporary tariffs of 107.1% to 212.1% on imported wine from Australia in 2020, the company had to relabel these wines and gradually sell them through the sales area of the winery located in the McLaren Vale wine region.
But Victoria Angove, the co managing director of the company, stated that if the above-mentioned tariffs are lifted, the company hopes to sell more wine to China than before.