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Signs China trade war could be ending, but farmers remain wary

Cotton farmers such as Nigel Burnett say the industry is thriving despite China's trade sanctions. (ABC Western Qld: Victoria Pengilley)

It's picking time for cotton growers in Queensland's central highlands and it's all hands on deck at Nigel Burnett's farm.

Harvest season means earlier-than-usual mornings and painfully long days, but the Emerald farmer is not complaining.

"It's a really good time for Australian cotton," Mr Burnett said.

After several seasons of good rain and high commodity prices, the cotton industry is booming.

This year's crop is expected to be the second-largest on record, with export values tipped to reach $3.5 billion.

"We went from a crop that was 600,000 [bales of cotton] and this year we're looking at 5.5 million bales," Mr Burnett said.

It is a dramatic turnaround from 2020, when cotton growers became another casualty in the geopolitical stoush between Australia and China.

Overnight, mills in China were ordered to stop buying Australian cotton and merchants were threatened with tariffs as high as 40 per cent.

Primary producers are cautious about overexposing themselves to a single market again. (ABC Western Qld: Victoria Pengilley)

Producers reliant on the Chinese market were forced to quickly rethink their future.

At the time, China's restrictions — which also affected coal, beef, timber, wine, barley and lobster — sought to punish the Morrison government for challenging China's increasing dominance in the region.

Two years on, many exporters have filled the gap with new international markets.

Despite rumours swirling that China may backflip on some trade restrictions with a change in Australia's federal government, some producers are not looking back.

Mr Burnett's cotton bales — once destined for the Chinese market — are finding new homes in Vietnam, Indonesia and Malaysia.

Producers once dependent on the Chinese market have put the country in the rear-vision mirror. (ABC Western Qld: Victoria Pengilley)

He said many farmers were cautious about overexposing themselves to a single market again.

"[China] had become a dominant factor and, on reflection, to have a more diverse market available to us, we would have been able to deal with the risk a lot better."

A tale of two exporters

It was a different story in South Australia's Coonawarra region, famous for its red grape varieties.

Producers were caught in the crossfire when they were hit with tariffs as high as 200 per cent.

Wine producers struggled with the high tariffs. (Supplied: Madison Lawson)

In the aftermath of the trade war, Mr Caddy said winemakers had struggled to offset the billion-dollar loss in sales.

"The Chinese were paying quite good prices compared to the other markets," he said.

"[Afterwards] many people assumed that we could go out and find new markets, but most of us in the industry knew that wasn't going to be possible. It's not that easy."

Grape grower Jim Caddy says wine producers in SA have struggled to find new markets. (ABC Riverland: Sam Bradbook)

While many winemakers are cautiously optimistic the countries' relationship is improving, those contacted by the ABC were hesitant to comment on the partnership for fear of further repercussions.

Mr Caddy said the industry was now dealing with an oversupply issue.

"[There] was about 220,000 tonnes that we used to sell to China, and now we suddenly have got to find other markets for it or get rid of those varieties and change them over to something else," Mr Caddy said.

"Things haven't changed a great deal.

Will a change in government help?

Earlier this month, Foreign Minister Penny Wong met her Chinese counterpart Wang Yi on the sidelines of the G20 foreign ministers' meeting in Bali.

Senator Wong expressed a desire to stabilise relations between the two nations, but she said Australia would act with "consistency".

Chinese Foreign Minister Wang Yi was open to a discussion. (Reuters: Greg Baker, file)

"It is in the interest of both countries that we have the relationship stabilised and the Australian government will always seek to resolve issues calmly and consistently," Senator Wong said.

The meeting was the first official discussion between foreign ministers in three years.

However, Trade Minister Don Farrell is yet to meet his Chinese counterpart, despite extending an "olive branch".

Whispers are emerging that China is considering lifting its soft ban on Australian coal.

But analysts say mending the relationship won't be as easy as simply kissing and making up.

"There's no doubt that the change in government has helped on the diplomatic side to establish dialogue again," CQ University resource economist John Rolfe said.

There is no better time to be a red meat producer, according to grazier Josh Phelps. (ABC Western Qld: Victoria Pengilley)

"Whether there's much thawing in relations I think is difficult to say.

"There's a lot of interest in diversification."

Professor Rolfe said despite the multi-billion-dollar loss in export sales for Australia, the bans had also inflicted damage on China.

Hope that 'cool heads prevail'

Grazier Josh Phelps believes producers have been forgotten in the geopolitical trade debate. (ABC Western Qld: Victoria Pengilley)

Ten meat processors across the country, including five in Queensland, are still banned from sending beef to China over COVID-related matters.

The meat industry's peak body said it was closely watching the government's moves to reset the relationship.

"Once conversation starts, then dialogue starts … we look and hope that will then lead towards the review and understanding of the information that we've provided around issues that have been raised with these suspensions," Australian Meat Industry Council chief executive Patrick Hutchinson said.

Despite the blockade, outback Queensland cattle grazier Josh Phelps believed the industry had bounced back.

Beef producers are optimistic China's soft trade bans could be lifted. (ABC Western Qld: Victoria Pengilley)

Mr Phelps's property was not directly affected by the restrictions — which targeted abattoirs accused of packaging concerns — but he said producers were optimistic.

"They only make so much good dirt, my grandfather used to say, so I just think that we are in a very good position to feed the world," he said.

"You just hope that diplomacy … and cool heads prevail over the next few years."

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