After a week of reports that Australia’s coal and cotton are being stopped from entering China, analysts have warned it’s not our trade relationship that needs work, but our diplomatic one.

Allan Behm, head of the International and Security Affairs Program at The Australia Institute said the relationship had become so ‘sensitive’ and strained that each side was constantly suspicious.

“The moment there is another movement on any front in the relationship with China we immediately think China is trying to play whack-a-mole with us,” he said.

“That is indicative of the current sensitivity in the relations, we will start at anything. It shows our nervousness in the relationship with China.”

This week it was reported that China had deferred Australian coal imports and told their cotton mills to avoid using cotton from Down Under, increasing alarm that the Asian powerhouse is targeting our exports.

China already received less coal from Australia than usual over the past month. Photo: AAP

Morrison government trade minister Simon Birmingham and agriculture minister David Littleproud said on Friday they were “seeking to clarify the situation” around cotton exports.

“Our cotton exporters have worked hard to win contracts and establish themselves as reliable suppliers of high-quality cotton in the Chinese market, which is an important input for many Chinese businesses,” Mr Birmingham and Mr Littleproud said in a joint statement.

“Our cotton exporters have worked hard to win contracts and establish themselves as reliable suppliers of high-quality cotton in the Chinese market, which is an important input for many Chinese businesses.”

Fuelling fears is the fact that diplomatic relations between the two countries have become so frosty that Beijing refuses to answer Australia’s calls.

But Mr Behm said it is ‘not unusual’ for China to use quotas.

“What China does all the time is impose internal quotas so that Chinese coal miners and Chinese coal can have access to the steel mills,” he said.

The Sino-Australian relationship has gone downhill since the PM called for an independent international inquiry into the outbreak of COVID-19.

“I suspect that that is what has happened this time.

My evidence for that suspicion? The Minerals Council and coal exporters have not jumped up and down and gone apoplectic.”

Director at Australia-China Relations Institute James Laurenceson said he was far from ‘panicked’ by the reports.

“I think two things are at play. Firstly, mostly the restrictions on coal are driven by domestic protections,” Professor Laurenceson said.

“The other thing is, it wouldn’t hurt if Australian commenters are also suggesting it could be action targeting Australia. It could be advantageous at a political level”

Historically, China’s economic coercion against Australia had mostly been “bluster” rather than “a serious measure designed to hurt Australia”, Professor Laurenceson said.

“The China-Australia trade relationship is holding up pretty well,” he said.

But according to Mr Behm, the diplomatic relationship needs some serious work.

This was showcased on Friday when Tasmanian senator Eric Abetz refused to apologise for demanding three Chinese-Australians condemn “the Chinese Communist party dictatorship” during a Senate inquiry investigating issues affecting diaspora communities in Australia.

Eric Abetz, refused to apologise to the three Australians. Photo: AAP

Mr Behm said our trade relations with the country were now seen through the lens of “fear and phobia” on display at the Senate Committee Inquiry on Wednesday this week.

“It’s against a background of rising sensitivity in Australia,” he said.

The Sino-Australian relationship has worsened dramatically since April, when Australia called for an independent international inquiry into the outbreak of COVID-19.

To fix it, the Morrison government needs to work out how to open dialogue with China again, Mr Behm said.

“I think the best thing the government could do is have a few headache pills, a cold shower and then get back into the business into running an adult and measured relationship with China.”