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Coal restriction begs the question has Australia and Chinas relationship been burnt out or left simmering?

Whilst the initial reaction to China’s restriction on Australian coal appears now to have been over the top, the point that it raises some serious concerns about the relationship between the two countries is very fair to ask. 

From the 20th of February onward, publications ranging from the ABC and the Sydney Morning Herald have reported that Coal has been banned resulting in a massive crash seeing the Australian dollar fall below 73 US cents. 

However, with the ash starting to settle from the initial reactions and overreactions to the restriction a more measured examination of the consequences this brings can be undergone. 

The initial reaction was a result of what many experts perceived to be the economic impact of the restriction. Coal is Australia’s most valuable natural resource with the export generating 64 billion worth of income a year with China accounting for roughly 25% of all Australian coal exported. For this reason, news of Australian coal importers being delayed was worrying and emergence of a potential 12 million tonne a year restriction into Dalian created great concern as seen in the fluctuating value of the AUD during the restrictions.

This is definitely a cause for concern however context alleviated some of the original worries. For a start the restrictions in the short term will not cause immediate worry according to the CBA commodities analyst Vivek Dhar who told the ABC “the ban as it stands affects only a small percentage of Australia’s coal exports. Last year, around 7 million tonnes of Australian coal went through the Dalian ports, so the threatened 12 million tonne quota may not stifle trade in the longer term”. However, he also states “It has crystallized the fear that something is going on, that China is targeting Australian coal,”.

So, with the market trending back towards its original state following the news the next concern is what this action says about Australia and China’s relationship socially, culturally and politically and how it is perceived. 

Mr. Huajan Ye a Chinese political officer commented that Australia and China’s political relationship has “definitely been affected” (by the coal restriction).  

He also continued “The current action on coal is a normal response to the unwarranted accusations made by Australia. The next step, will correspond with Australia’s actions in response”. 

“China is Australia’s biggest trade partner. But recently there have been many incidents including the 5G network events, and Sino-US trade wars, which have soured relationships.

“Australia is China’s long-standing coal partner. The price and quality of Australia’s coal is competitive in the world, which is an important condition of business for us. But there is an old saying in China that only friends can do business”. 

Before concluding “There is a major disagreement between Australia and China on values”.

The political turmoil will also have significant social consequences according to Eva Ye an international student studying a masters in international relations who commented.

“It is already having a significant effect on education. There are 45 universities in China who have stopped cooperation programs with many of Australia’s major universities”.

“At this stage, it does not affect my life directly. However, if this situation continues, it may affect my planning for my future. I may not choose to study or work in Australia anymore”

Many Australian students voiced differing opinions on the issue but a common theme was that most did not know that there were many tensions at all.

Kurt Murray, 19, studying Civil Engineering at The University of New South Wales commented “I didn’t know that there was a coal restriction” when asked about his view on the issue, before continuing “I hope any issues stemming from it are solved though, its important we have a good relationship with our neighbours”.

Patrick Carolan, 19, an apprentice electrician said “Wouldn’t have guessed there was an issue there’s a huge Asian community in Kensington so I just assumed things were all good”.

Edward Pomering, 20, a student of Economics at the Australian National University had more to say commenting 

“I think the relationship isn’t in the best place however it’s definitely salvageable and in the interest of both parties to mend fences.”

“Australia recognizes the importance of continued partnership with China as they’re an economic superpower and are in close proximity to us so I expect the issues won’t go further past this”. 

From these comments we can see there is a clear difference in how Australians and Chinese students perceived the relationship between the two countries. With this current action by China creating a sense of nervousness as to whether the actions taken by both countries can be taken as “occasional interruptions to the smooth flow” (of business) as said by Australian trade minister Simon Birmingham or rather the start of the complete deterioration between Australian Chinese relations we are warned about Mr. Ye.

Whichever it is DFAT first assistant secretary Graham Fletcher telling the ABC that “we both have an interest in getting to the bottom of it” bodes well for more clear communication in the future.