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‘Strong signal’: Anthony Albanese’s China reset opens door to $20 billion trade talks

Chinese president praises Albanese's approach

A resumption of top-level dialogue between Beijing and Canberra has swung the door open to negotiating an end to $20 billion worth of trade sanctions against Australia, a leading expert says.

Prime Minister Anthony Albanese met China’s President Xi Jinping at the G20 in Indonesia on Tuesday night, with the pair signalling it’s time to repair our long-strained diplomatic relations.

It was the first meeting of this kind between Australia and China since 2016, when a series of disputes culminated in China slapping widespread trade restrictions on many Australian goods from 2019.

Mr Albanese told reporters after the negotiations that there had been no undertakings given by China, and that it was unrealistic to expect our trade disputes would be resolved overnight.

But James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney, said the resumption of top-level talks shouldn’t be underestimated.

“The meeting of leaders decisively ends China’s diplomatic deep freeze of Australia,” he said.

“It sends a strong signal to the Chinese bureaucracy, and a natural follow-on would be a meeting of trade ministers to dig into some of the disputes in the space.”

No immediate action

China began restricting Australian exports of barley, beef, cotton, coal and wine in 2019 after tensions spiked over many issues amid a much larger trade war between the US and China.

The sanctions, worth about $20 billion in total, were initially damaging for industries but businesses have since found other customers, limiting the fallout to the local economy.

Australian businesses are watching the latest developments cautiously, with Australian Industry Group chief executive Innes Willox noting that Australia-China relations are still very frosty.

“It is highly unlikely that, with ongoing geopolitical tensions in our region, the overall relationship will any time soon regain its former diverse economic momentum,” he said on Wednesday.

“However, industry strongly hopes that today’s meeting can provide a platform for ongoing political dialogue that over time opens the way for a new and more stable economic and business relationship between our two countries.”

The way forward

Although there remain serious differences between Canberra and Beijing that could stall a thawing of relations, Mr Laurenceson says there are also ways Australia could look beyond them.

He said Australia differs from the US in that it doesn’t want to economically contain China, which could be a point of difference that could get talks going at the ministerial level.

“It wouldn’t be hard for [Trade Minister] Don Farrell to tell his Chinese counterpart that Australia remained committed to welcoming Chinese investment in non-sensitive sectors,” Mr Laurenceson said.

“He could point to Australian approvals of Chinese investment in lithium mining and processing, while other countries like Canada have blocked it.”

Mr Laurenceson said such talks could provide China with an “off ramp” to ease trade sanctions quietly. After all, commodity trade has been what has built Australia’s relations with China.

“If the momentum of the leaders’ meeting can be locked in,” he said, “and the calm and competent diplomacy exercised by the Albanese government to date can be continued, there’s reason to have some confidence we might see progress on sanctions in the months to come.”

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