Asia-Pacific

'Threshold test': Security analyst says Australia must stand up to China's coal ban

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A security expert says Australia must stand up to China's bullying.

Australia is facing a "threshold test" in its handling of its relationship with China after Australian coal imports were banned from five ports in the country's north-east, a security expert says. 

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Australian Strategic Policy Institute executive director Peter Jennings says the reported ban on coal imports appears to be in retaliation to the banning of Chinese telecommunications company Huawei from the 5G mobile rollout.

"I think this is going to be a threshold test of our current and future governments," Mr Jennings told SBS News.

Australian Strategic Policy Institute Executive Director Peter Jennings.
Australian Strategic Policy Institute executive director Peter Jennings has no doubt China's move is politically-motivated.
AAP

"We’re going to have to decide how we can look after our security and sovereignty even if that comes at the price of some economic cost to our trade with China."

While government frontbenchers denied the move was politically-motivated, the former senior Defence Department official, was in no doubt about China's strategy. 

"I think China is becoming more open in its willingness to use bullying and, frankly, they do it because it works.

"It works on a whole range of countries around the world which decide that for economic interests the best thing they can do is shut up and try not to offend China."

But he was confident it would not work this time on Australia. 

"I think what’s happening now is the bullying is simply becoming too obvious and it’s not going to be possible for us to look the other way."

Government plays down ban

Treasurer Josh Frydenberg has cautioned against jumping to conclusions as Australian officials continue talks with their Chinese counterparts to confirm reports of Dalian customs' ban on Australian coal imports.

Reuters reported that five harbours overseen by Dalian customs - Dalian, Bayuquan, Panjin, Dandong and Beiliang - will not allow Australian coal to clear through customs. Coal imports from Russia and Indonesia will not be affected.

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Australian coal imports have been banned from five ports in China
Australian coal imports have been banned from five ports in China

My Frydenberg rejected claims that the move by China is retaliation to Australia's decision to ban Chinese telecommunications giant Huawei from the 5G mobile infrastructure rollout.

Australia also recently revoked the visa of a prominent Chinese businessman, further straining ties.

"I wouldn't jump to conclusions," Mr Frydenberg told reporters on Friday. 

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DFAT seeks urgent clarification about China's ban on Australian coal imports
DFAT seeks urgent clarification about China's ban on Australian coal imports

"The Chinese have also done these sort of environmental tests before. The key point is that the two-way trading relationship between Australia and China is vitally important and is very strong."

Coal is Australia's biggest export earner and the Australian dollar tumbled on the news, falling more than 1 per cent to as low as $0.7086.

China says announcement is 'completely normal'

Asked if the ban was related to bilateral tensions, Geng Shuang, a spokesman at China's foreign ministry, said that customs were inspecting and testing coal imports for safety and quality.

"The goals are to better safeguard the legal rights and interests of Chinese importers and to protect the environment," he said, adding that the move was "completely normal".

Beijing has been trying to restrict imports of coal more generally to support domestic prices.

The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China extend clearing times for Australian coal to at least 40 days.

Dalian handles both thermal and coking coal imports but the clampdown is expected to have a bigger impact on coking coal compared to thermal coal. The former is used in steel making, while the latter is used to generate electricity.

The five ports affected handled about 14 million tonnes of coal last year, half of which was from Australia, according to Gu Meng, analyst at Orient Futures.

Additional reporting by AAP

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