Australia & China – Halt to Australia's China coal exports linked to political factors

The Australian government on Tuesday (13 October) sought to clarify media reports on Monday that four Chinese state-owned utilities had been verbally notified by China's customs to immediately halt Australian coking and thermal coal imports with effect from 9 October. According to the reports, the Australian government had not received any formal notification from the Chinese authorities regarding any measure to restrict coal imports. Australia is China’s largest supplier of thermal and coking coal imports used respectively by the country’s electricity generation and steel making industries. The latest trade statistics indicate all Australian exports to China fell 5 per cent in the year to September despite a 13 per cent surge in shipments from other countries.

Why it matters: The implication of the seemingly orchestrated reduction in Australian exports is that Beijing is seeking to impose an economic cost on Canberra’s political decisions regarding a range of issues relating to human rights, the coronavirus pandemic and support for US policies in Asia China views as ‘unfriendly.’ Australia’s Trade Minister Simon Birmingham on Tuesday noted while disruptions to coal and other exports to China were not ‘an uncommon thing’ he would seek assurances from Beijing that the terms of the China-Australia Free Trade Agreement and China’s World Trade Organisation (WTO) obligations were being met. Any move to involve the WTO is likely to result in further actions by Beijing against Australian economic interests, including within China and potentially Hong Kong, in the three-month outlook. Australian companies should be aware of the impact such measures could have on their staff, assets and operations.