What it will take for China to drop trade sanctions against Australia


China’s trade war with Australia could soon end as diplomatic relations finally thaw between the two nations after years of escalating bitterness and military tensions.  

New Chinese Ambassador to Australia Xiao Qian opened the door to talks that could end the two-year standoff, insisting the countries should be ‘friends’.

He laid out the groundwork needed to lift $20 billion worth of sanctions which he said required the new Australian Government to offer a ‘good’ political solution.

The ambassador said Western Australia – which continues to enjoy a minerals boom exporting to China – should be the diplomatic blueprint for the rest of the country. 

He said China and WA Premier Mark McGowan had ‘different views on certain things’ but found ‘common grounds and consensus’ for ‘mutually beneficial co-operation’.

Chinese President Xi Jinping’s  trade war with Australia could soon end as diplomatic relations finally thaw between the two nations after years of escalating bitterness and military tensions

‘A good political relation is helpful for trade relations and a bad political relation [is] also affecting our cooperation in other areas as well,’ he told The West Australian.

‘If we have an improved relationship politically, it will create an atmosphere to relax some of the Chinese businessmen so [they] can think about coming back, think about resuming their business and trade relations with Australia.’

Defence minister Richard Marles ended a near-three year diplomatic stalemate and met his Chinese counterpart General Wei Fenghe this weekend.

The pair talked for an hour in Singapore on Sunday morning and had ‘full and frank’ discussions, said Mr Marles, who called it ‘very significant’ and a ‘critical first step.’

‘It’s three years since defence ministers of our country have met,’ he said. ‘Australia and China’s relationship is complex – it is really important that we are engaging in dialogue right now.’

The meeting was hailed by former ASIO boss Dennis Richardson who said it was created by the change in government – but just the first step in a long process. 

‘New governments don’t bring the barnacles, the bruises and the baggage which you accumulate when you’ve been in office for a decade,’ he told ABC Radio.

‘A change of government after a decade does bring with it opportunities of this kind.’

But he warned: ‘I don’t think they’ll be looking for any startling breakthrough anytime [soon].’

Former ASIO boss Dennis Richardson who said the opportunity for a thaw in the stalemate was created by the change in government - but just the first step in a long process

Former ASIO boss Dennis Richardson who said the opportunity for a thaw in the stalemate was created by the change in government – but just the first step in a long process

President Xi Jinping imposed trade sanctions on Australian products in 2020 after Australia demanded an inquiry into China’s role in the origins of the Covid pandemic.

He also issued a list of 14 grievances he had with Australia, citing blocks on Chinese investment and Australia ‘spearheading the crusade against China’. 

Relations have since worsened with aggressive confrontations between Chinese and Australian military including blinding lasers fired at Australian surveillance aircraft and chaff dangerously released close to another Australian plane’s engines.

China has also been trying to expand its influence in the Pacific, agreeing a security treaty with the Solomon Islands while attempting to woo other island nations. 

But Beijing and Canberra see the change in Australia’s government as the chance to rebuild the relationship.

Trade Minister Don Farrell signalled he would invite Chinese Commerce Minister Wang Wentao for talks to address the embargo issue.

And Chinese Premier Li Keqiang has already sent a message of congratulations to new Prime Minister Anthony Albanese after his election victory last month.

New Chinese Ambassador to Australia Xiao Qian has opened the door to talks which could end the two-year row, insisting the countries should be 'friends'

New Chinese Ambassador to Australia Xiao Qian has opened the door to talks which could end the two-year row, insisting the countries should be ‘friends’

Ambassador Xiao said it was a sign ‘very clearly that a healthy and stable relationship between Australia and China is in the interests of our two countries’.

‘The message is clear,’ the diplomat said. ‘The gesture is friendly. We are expecting a friendly response from the Australian side and we are still in the process.

‘We have reasons to be partners and friends. There’s no reason for us to look at each other as so-called hostilities or even threats or an enemy.

‘All-in-all we have reasons to believe that China and Australia, we have more common grounds then differences.’

The Chinese ambassador has  laid out the groundwork needed to lift $20 billion worth of sanctions which he said required new Prime Minister Anthony Albanese to offer a 'good' political solution

Defence minister Richard Marles started the dimplatic process by ending a near-three year stalemate and met his Chinese counterpart General Wei Fenghe for talks in Singapore on Sunday

The Chinese ambassador has laid out the groundwork needed to lift $20 billion worth of sanctions which he said required new Prime Minister Anthony Albanese (left) to offer a ‘good’ political solution. Defence minister Richard Marles (right) started the process by ending a near-three year diplomatic stalemate and met his Chinese counterpart General Wei Fenghe for talks in Singapore on Sunday

The ongoing sanctions have hit Australian products like coal, barley, crayfish and wine

The ongoing sanctions have hit Australian products like coal, barley, crayfish and wine

But he warned all meetings had to be constructive – and if they end up quarrelling, it could set back relations even worse than before.

He cited the previous Coalition’s government’s decision to ban Chinese manufacturer Huawei from bidding to install Australia’s 5G network as a key turning point in declining relations.

‘Many Chinese businessmen were so much surprised and they were alarmed and they were disappointed,’ he said. 

‘Also they were a little bit scared. Today this has happened to Huawei. What about tomorrow? Is it going to happen to me? Is it going to happen to my company?’

Another key issue for China is the AUKUS defence treaty, which gave Australia access to US and UK nuclear submarine technology, that China sees as a serious threat.

‘AUKUS, in our view, is targeting China,’ said the ambassador. ‘Trying to stop the existing normal relations and cooperation between China and the relevant countries.

‘The idea, is not a good idea.’

He also defended recent clashes between Australian and Chinese military, and said the two nations needed to find a way to avoid further confrontations.

In February, in the Arafura Sea in Australia’s economic zone off the north coast, a Chinese Naval ship shone a military-grade laser at an Australian P-8 Poseidon surveillance aircraft in what was branded a hostile act by the Coalition government.

The Chinese ambassador also defended the recent clashes between Australian and Chinese military, and said the two nations needed to find a way to avoid further confrontations

The Chinese ambassador also defended the recent clashes between Australian and Chinese military, and said the two nations needed to find a way to avoid further confrontations

Australian P-8 Poseidon surveillance aircraft have been targeted by Chinese military using a laser in one incident and by a fighter jet in another clash last month

Australian P-8 Poseidon surveillance aircraft have been targeted by Chinese military using a laser in one incident and by a fighter jet in another clash last month

And last month, over international waters near Taiwan in the South China Sea, another P-8 was carrying out a surveillance patrol when it was intercepted by a Chinese J-16 fighter jet.

Defence minister Marles  later revealed the J-16 initially went alongside the P-8 and fired off flares.

It then accelerated, cut across ahead of the P-8, and released ‘a bundle of chaff which contained small pieces of aluminium, some of which were ingested into the engine of the P-8 aircraft’.

But the ambassador insisted the situation could have been interpreted where China had felt threatened. 

‘A scenario could be that there’s a situation where the Australian plane was either close to or above the Chinese territory and so the Chinese side was feeling kind of a risk of danger or danger itself,’ he said.

‘So they have to do something to warn the other side not to approach too closely. The warning was issued several times but without any effect. That is what happened there.

‘I think the important thing is for us to understand that we should be careful about such a situation and take measures not to let it happen in the future.’

Despite the ongoing sanctions on Australian products like coal, barley, crayfish, and wine, business has been booming for iron ore exports to China.

China and WA Premier Mark McGowan had 'different views on certain things' but found 'common grounds and consensus' for 'mutually beneficial co-operation', said the ambassador

China and WA Premier Mark McGowan had ‘different views on certain things’ but found ‘common grounds and consensus’ for ‘mutually beneficial co-operation’, said the ambassador

Western Australia has continued to enjoy a minerals boom exporting to China and should be the diplomatic blueprint for the rest of the country.

Western Australia has continued to enjoy a minerals boom exporting to China and should be the diplomatic blueprint for the rest of the country.

Ambassador Xiao praised Mr McGowan for his dealings with China that brought billion-dollar dividends to the state.

And he vowed China would continue to snap up the state’s mineral resources, and would even consider adopting more environmentally-friendly technology solutions.

China alone created more carbon dioxide in 2019 than the next four countries combined, and some of its companies generate more pollution than entire nations like Pakistan. 

‘High quality iron ore is so important to China, to China’s industrial development and steel industry,’ he said. ‘This relationship we will go on. It’s mutually beneficial.

‘Not only the existing co-operation in the trading of iron ore and other mining products, but also there’s new areas I think both sides could think about tapping into. 

‘For example, more green energy to address the climate change issues.’

He also insisted Chinese firm Landbridge’s 99-year lease on Darwin Port will bring benefits for Australia and create a vital northern trade link between the two nations.

The 2015 deal is being re-examined by the new Labor government, but the ambassador was optimistic it would be allowed to remain. 

He added: ‘I’m looking forward to a positive review and also a positive outcome.’

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