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In 2020 Australia’s political relations with China plumbed new depths. Trade and other economic ties were also hit with disruption. Contributing to this deterioration, and complicating an accurate assessment of the consequences, has been a raft of misunderstandings. This article demystifies the bilateral trade tensions by exposing the deeper drivers of political friction, providing a critical assessment of the vulnerability of the Australian economy, and placing the current state of Australia’s relations with China in a comparative regional perspective. These discussions provide context for a detailed analysis of the legal issues that Chinese trade measures have created under the rules of the World Trade Organization (WTO) and the China – Australia Free Trade Agreement (ChAFTA). We show that these legal issues have been over-simplified in existing work. A clear understanding of these issues offers the best prospect for an improved relationship trajectory, serving both countries’ interests.

Treasurer Jim Chalmers will be attending the Australia-China Strategic Economic Dialogue in Beijing to discuss various important topics with his Chinese counterpart. The dialogue was last held in 2017 and was formally suspended in 2021 after the cancellation of the Victorian state government's participation in China's "belt and road initiative." Chalmers' top priority is understanding the risks of China's slowing economy and its impact on Australia's outlook. While there are concerns over falling commodity prices, the latest trade figures show that China continues to import Australian iron ore and lithium at record volumes. The relationship between Australia and China is complex, with booming Australian wine exports and record numbers of Chinese students studying in Australia. China's concerns include Australia's treatment of Chinese investors and the enforcement of Australia's laws and regulations. China will likely seek reassurance that Australia will not impose tariff barriers on Chinese imports. However, Australia's economic relationship with China remains complementary, and trade with China enjoys bipartisan support. Chalmers' upcoming trip is seen as an opportunity to manage the complexity of the relationship and realize its potential. [Extracted from the article]

The article discusses the recent removal of tariffs on Australian wine by China after over three years of imposition, highlighting the significant impact on Australia's wine exports and the challenges in re-establishing market presence. It also examines the changed landscape in the Chinese wine market, the potential competition Australian producers may face, and the broader implications for Australia-China trade relations.

China's Ministry of Commerce has lifted its tariffs on Australian wine, which had been in place for over three years. These tariffs had a devastating impact on Australia's wine exports, causing a significant decline in sales to China. However, re-entering the Chinese market will not be easy, as other suppliers have filled the gap left by Australian wine and the overall size of China's imported wine market has also decreased. Australian wine producers will face tough competition in a smaller market, but they may benefit from a return to preferential tariff rates negotiated under the China-Australia Free Trade Agreement. It is important for Australian exporters to remain vigilant, as China has a history of using retaliatory measures. However, there are factors that could encourage China to maintain its decision to remove tariffs, such as the need to maintain credibility at the World Trade Organization and the desire for positive diplomatic relations with Australia. While the removal of tariffs will provide some relief, it is unlikely that the Chinese market will return to its previous levels of success for Australian winemakers. [Extracted from the article]

Chinese Foreign Minister Wang Yi's visit to Australia has set a positive tone for a diplomatic reboot between the two countries. While there are still deep-seated differences, both Wang and Australian Foreign Minister Penny Wong emphasized the need to manage these differences better to avoid another diplomatic freeze. Wang's remarks were almost identical to Wong's in tone and substance, highlighting the desire for mature, stable, and productive relations. The visit suggests that the relationship between Australia and China is on firmer ground than expected, with recent incidents being resolved without prolonged escalation. However, the future of the bilateral relationship remains uncertain and could be disrupted by extreme developments. [Extracted from the article]

Australia's research institutions are being targeted by nefarious actors, including China. Critics argue that Australia is not doing enough to respond to threats such as espionage and theft of intellectual property. However, the Australian Security Intelligence Organisation (ASIO) contends that the research sector is just one of several vulnerable sectors and that Australia is actually ahead of the curve in identifying and managing these risks. The government has established the Universities Foreign Interference Taskforce, which has developed best-practice guidelines for managing the risks. The response to these threats is considered proportionate and collaborative, balancing security with the need for international collaboration. A prescriptive and mandatory approach would have imposed unnecessary costs and hindered innovation. While it is important to be clear-eyed about threats to research security, a one-sided focus on China and heavy-handed approaches would not be beneficial for Australia. [Extracted from the article]

There are few more reliable narratives in the business andfinancial press than, "If China sneezes, Australia will catch acold". He found this would reduce Australia's GDP growth rate bybetween 0.15 and 0.57 percentage points depending on the timeframe, summarising that: While not trivial, given Australia's current growth rate, theseestimates are hardly enough to justify prophecies of doom. [Extracted from the article]

This approach can also potentially be a template for the parties to suspend WTO dispute proceedings brought by China against Australia for its anti-dumping and anti-subsidy tariffs on selected Chinese imports. The agreement between Australia and China to resolve a dispute over Chinese tariffs on Australian barley without World Trade Organization (WTO) adjudication is evidence of a distinct improvement in relations. [Extracted from the article]

Rather than reaching for something loftier, "stabilisation"made sense given the new Labor government was inheriting arelationship in its worst state since 1972, the year theWhitlam government moved to recognise Beijing (instead ofTaipei) as China's sole legal government. For the first time in a long time, a year can begin with arealistic assessment that Australia-China relations are onan upward trajectory again. [Extracted from the article]

Albanese-Xi meeting won't resolve Australia's grievances overnight. On Monday, Trade Minister Don Farrell went as far as describing recent trade sanctions on China imposed by the Biden administration as "draconian". Australian political leaders were now once again referring to China as a "comprehensive strategic partner", while emphasising that "both sides", not just China, would need to reflect on their handling of differences. [Extracted from the article]