A widening political rift between Canberra and Beijing is spilling over into trade ties between the two.
Australian Prime Minister Scott Morrison said any shift by China away from imports of high-quality Australian coal would be a “lose-lose” for the environment and their trading relationship.
Chinese media outlets including The Global Times and Caixin on Monday reported that China’s top economic planner had authorised power plants to import coal without clearance requirements from most countries except Australia.
Australia on Tuesday urged China to clarify the reports, which it said would breach international trade rules if they were true.
Coal is the third-biggest export from Australia, which has been embroiled in a worsening diplomatic dispute with China, its largest trading partner. Beijing has imposed a series of trade reprisals after Canberra called for an international inquiry into the source of the coronavirus.
Australia’s prime minister said a shift by China away from Australian coal imports would be “a bad outcome for the environment”.
“It really is a lose-lose here because Australian coal, compared to that coal that is sourced from other countries, the other countries have 50 percent higher emissions than Australian coal,” Morrison told media on Tuesday.
Although four out of 13 billion Australian dollars ($3bn out of $9.8bn) in thermal coal exports went to China, it was not Australia’s largest customer, said Morrison, adding that any restrictions on Australian coal would be in breach of World Trade Organization (WTO) rules.
Shares of Australian coal exporters fell sharply. New Hope Corp Ltd and China-controlled Yancoal Australia Ltd were down 12 percent in morning trading, while shares of Whitehaven Coal Ltd were down 9 percent, against a slightly weaker overall market.
Diversified mining giant BHP Group Ltd, which has coal mining interests, was down 2.5 percent.
Australian Trade Minister Simon Birmingham said there had been “a pattern of disruption” of Australian trade with China, and it was well documented that vessels had been delayed in offloading Australian coal.
Australia has raised concerns at a WTO meeting about China taking measures against Australian barley, wine, meat, dairy, live seafood, logs, timber, coal and cotton.
Beijing’s opaque action in the resources sector involved “disruption through use of state influence with different companies”, Birmingham said on Tuesday.
Minerals Council Australia chief executive Tania Constable said the success of Australia and China’s trade in minerals relied on a “rules-based trade system”.
The council encouraged the “Australian and Chinese governments to work together to resolve these issues and restore stability to the long-term trading relationship,” she said in a statement.
The Chinese embassy last month outlined grievances about restrictions on Chinese investment in Australia, and criticism of China by Australian parliamentarians and the media.
Morrison said Australia was a liberal democracy and his government would not back down on these issues.
“If a perception emerges that there is a conflation between political issues and a trading relationship … That can create a lot of uncertainty for many other trading partners,” he said.
Meanwhile, Australia also said it has built a strong case to challenge anti-dumping duties imposed by China on its barley exports and will announce soon whether it will take the matter to the WTO.
Australia has been working closely with the grains industry to “build the strongest possible case,” Birmingham said. Barley was slapped with tariffs of more than 80 percent in May after China accused Australia of dumping the grain and subsidising growers.
“Australian grain growers and farmers are not subsidised, they don’t dump their products on global markets and we clearly have the evidence to mount a strong case,” Birmingham said.
He said Australia has legal avenues it can pursue via the WTO over China’s actions on barley and wine imports.
Birmingham implored China to open up lines of communication and abide by a rules-based trading system.