Hopes are building that trade sanctions imposed on Australian exports by China will be lifted in coming months as diplomatic relations between Canberra and Beijing continue to thaw.

A turning point came this week when a shipment of 72,000 tonnes of Australian coal arrived in China, the first since Beijing slapped restrictions on it two years ago.

And with Trade Minister Don Farrell soon to travel to Beijing for bilateral meetings, there is hope other trade restrictions on goods like lobsters, barley and timber will be lifted too.

James Laurenceson, director of the Australia China Relations Institute at the University of Technology Sydney, described the arrival of an Australian coal shipment in China as the “next phase” in thawing relations, and predicted an easing of sanctions on lobster exports.

“The ministerial dialogue has been broadening and deepening since last May,” he told The New Daily.

“Now we’re starting to see action following that dialogue.”

Australia’s largest trade relationship has been under pressure since 2019 when an escalating diplomatic spat between Beijing and Canberra spilled into the trade domain.

But despite predictions of a massive economic hit locally, the value of Australia-China trade ended 2022 at a record high of $284.6 billion – underpinned by soaring mineral exports.

Australia continues to be one of the world’s largest fossil fuel exporters. Photo: AAP

Australian businesses that suffered under China’s trade sanctions have also proved adept at diversifying, finding new business across India, the Middle East, Europe and the US.

Nevertheless, the return of unrestricted trade with China is being hailed as a win for Australia’s economy, with businesses now poised to resume an expansion into the world’s largest market.

“Coal obviously isn’t everything, but the general point is that this trajectory of thawing we are on is proceeding exactly the way the government hopes,” Mr Laurenceson said.

Changed dynamic

Australia’s first coal shipment to China in two years must still clear customs checks, but Trade Minister Don Farrell this week welcomed the development.

“Any step towards resolving the trade impediments would be welcome,” he said in a statement.

Prime Minister Anthony Albanese also cautiously welcomed news of the coal shipment, saying on Thursday that “the dynamic between Australia and China has changed”.

“China currently receives more exports by value than [our] next three trading partners combined, so that relationship is important for Australian jobs,” Mr Albanese said.

Prime Minister Anthony Albanese and China’s President Xi Jinping met in November. Photo: Getty/TND

“It’s good for China to receive those goods, because we have not just resources, but we have wine, meat, barley, seafood – the best in the world.

“It’s in China’s interest for any impediments to be removed.”

Mr Albanese met with representatives of Australian businesses on Wednesday night who were “very pleased with the constructive direction of the relationship”.

China’s foreign ministry spokeswoman said the two nations had “highly complementary economies” when asked about the trading relationship.

“The sound and steady growth of ties between our two countries serves the fundamental interests of both peoples and helps advance peace, stability and prosperity,” Mao Ning said.

“We are ready to launch or resume dialogue and communication with Australia in various sectors, expand co-operation, manage differences and strive to rebuild trust.”

Pragmatism in relations

Mr Laurenceson said the Albanese government has sought to strike a new balance in China relations where considerable differences between Canberra and Beijing are managed more pragmatically.

That, he said, is a key reason why Beijing has been prepared to ease trade restrictions despite increasingly frosty geopolitical tensions arising amid the AUKUS defence alliance, which will see Australia acquire nuclear submarines.

“Both sides are really gauging each other now with realistic expectations,” Mr Laurenceson said.

That view was echoed by Mr Albanese on Thursday.

“We will co-operate where we can, we will disagree where we must, and we’ll engage in our national interest,” he said.