Fierce trade war set to thaw as China imports Australian coal for the first time in years

China will allow imports of Australian coal for the first time in almost two years as the fierce trade war between the two countries begins to thaw.

Customs officials in the coastal province Guangdong allowed Australian coal shipments to be cleared on Thursday, just days after state-owned companies in China received the green light to place orders.

The move marks a significant shift in trade relations between the two countries, with Australian coal to arrive on Chinese shores for the first time since 2020 after a stand off with the former government led by Scott Morrison.

The trigger for the collapse in relations can be traced to the Morrison’s government for an independent examination into the origins of Covid-19. 

China will allow imports of Australian coal after almost two years in a symbolic bid to repair ties (pictured is Chinese President Xi Jinping on left with the President of the Phillipines)

The first shipment is expected to arrive as early as this month as China looks for ways to rebuild its economy after it was battered by the pandemic, The Australian reports.

China was careful never to announce an official ban on Australian coal, however, imports dropped by 85 per cent in 2021, with the country instead importing coal from the United States, Indonesia and Russia.

Despite the development, China will maintain restrictions on wine, barley and lobster that were introduced after a security pact was signed by the US, UK and Australia.

There are hopes these bans will be lifted after four Chinese power companies will begin to purchase Australian coal from April 1.

Prime Minister Anthony Albanese and Chinese President Xi Jinping met for the first time in November last year, while Penny Wong recently met with her counterpart Wang Yi met in China’s capital, Beijing, in December.

Prime Minister Anthony Albanese (pictured with his partner Jodie Haydon) and Chinese President Xi Jinping met for the first time in November last year

But China’s ambassador to Australia, Xiao Qian, has warned it could all come crashing down with a devastating effect on local jobs if Australia persists with the US military deals. 

‘If that happens, that is not going to serve the interests of Australians,’ he said. ‘Maybe it’s going to serve the interests of other countries.’ 

China has reportedly offered to drop the trade war if Australia withdraws its complaints to the World Trade Organisation about bans on certain goods. 

But that offer now appears to be subject to Chinese concerns over Australia’s military upgrades through the planned $70billion nuclear submarine fleet and a $558million deal to buy the HIMARS missile launchers. 

The first shipment of Australian coal is expected to arrive on Chinese shores this month (pictured is the Blair Athol mine in Moranbah in Queensland)

An influential government-run Chinese newspaper this week warned Australia to back off or face dire consequences.

‘We still have reservations about lifting the sanctions against Australia,’ said an editorial in China’s Defence Times.

‘Although China and Australia have resumed dialogue, the Australian government has not shown the full sincerity we want to see in really wanting to improve relations.

‘On the contrary, it has become more and more cooperative [with the US] at the military level. The US wants to contain China’s ambitions in the Asia-Pacific region.

Prime Minister Anthony Albanese met with Chinese President Xi Jinping in November and Foreign Minister Penny Wong met with her counterpart in Beijing last month

‘The US always wants to deploy rockets, bombers and other armaments in Australia.

‘The Australian government’s move is undoubtedly hurting the already fragile Sino-Australian relationship.’

Ambassador Xiao insisted the outlook was still optimistic and hailed the new Chinese year of the rabbit as a chance to leap ‘over obstacles and come into good luck.’

He said the attitude in Australia had ‘turned around from falling behind to stability, and from stability perhaps to improvement and even development’.

He added: ‘I would hope that as we are improving our relations, we will have more encouragement to Chinese companies to come back [to buying from Australia].’