In June last year, the people of Sydney woke to the unexpected sight of the Chinese Navy in the harbour. For some, it was a concerning sign that the Morrison government had perhaps allowed Australia to be pulled too far into Beijing's orbit.
Prime Minister Scott Morrison said the publiclyunannounced arrival of the warships had been planned for some time and it was a "reciprocal visit" after Australian naval vessels had visited China.
Now, less than 18 months later, things couldn't be more different between Canberra and Beijing, with diplomatic and trade relations seemingly continuing to deteriorate with each passing day.
And it's not just the relationship between Australia and China that has changed dramatically since the Covid-19 pandemic began in Wuhan, China in December.
India, Japan and the United States are all pressing for increased co-operation with Australia on everything from supply chain security, to cementing a potential Nato-like alliance in the Indo-Pacific.
This ongoing transformation of the geo-strategic balance of the Indo-Pacific has likely played a role in further accelerating Canberra's deteriorating trade relationship with Beijing.
Until recently Beijing had chosen to target a number of Aussie exports to China, including but not limited to, barley, wine, wheat and beef.
However, in recent weeks, there were concerning signs that Beijing may be adding a far larger and economically vital industry to its list of targets: Australia's coal exports.
According to a report from shipping news website Splash, more than 20 large bulk carriers with cargo holds filled with Australian coal were late last month waiting to be unloaded at Tangshan's Jingtang Port in northeastern China.
Delays in unloading cargo are not uncommon in China's ports, whether due to monthly import quotas imposed by the Chinese Communist Party or simply logistical challenges because of the sheer volume of traffic.
But this time is different. Rather than the delays of up to 45 days Australian coal export shipments were forced to endure last year, in this instance most of these ships have been waiting to unload their cargoes for more than three months.
These issues are not isolated to the port of Jingtang. Many other ships are experiencing the same problem in numerous ports across the industrial heartland of northeastern China.
Chinese President Xi Jinping during talks during at SkyCity Grand Hotel in Auckland. Photo / NZME
Amid the backdrop of the one-sided trade war between Beijing and Canberra, the unofficial ban on imports of Australian coal would mark the largest escalation in the conflict so far.
By banning Australian coal imports, Beijing would be effectively blowing a $15 billion a year hole in the Australian economy, just as it attempts to recover from the Covid-19 pandemic.
According to analysts the ban could be in place for the long haul.
"China is less reliant on Australian coal imports compared with, say, iron ore, therefore we have little reason to doubt that this verbal warning could persist for an indefinite period as a potential retaliatory measure over recent political tensions," Navigate Commodities managing director Atilla Widnell said.
Although there has been no official notice in writing of the ban, Beijing has passed on word regarding the ban verbally throughout the Chinese shipping industry, likely in order to avoid a potential complaint by Australia to the World Trade Organisation (WTO).
Outside China, demand for coal is still yet to bounce back to pre-pandemic levels. As the global economic recovery proceeds more slowly than economists first anticipated, it also now faces further challenges in the form of second and third waves of the virus across much of the world.
World demand for coal remains low due to the Covid-19 pandemic. Photo / 123RF
Unfortunately for Australia, in the current global economic environment its leverage in the coal trade with Beijing has effectively all but evaporated.
Global steel production has collapsed, with Japanese steel manufacturing down to its lowest level in 52 years and European trade unions warning 50 per cent of European steelmaking capacity could be gone by the time the pandemic is over.
Demand for thermal and steelmaking coal is likely to remain well below pre-pandemic levels for potentially years to come, so Beijing has chosen the perfect time to strike.
It's entirely possible the apparent Chinese ban on Australia coal exports could be in place for the foreseeable future and severely damage the Australian economy. China consumes around $15b a year worth of Australian coal exports.
While Australia struggles to recover from the pandemic and the subsequent recession, the potential loss of coal exports to China in the current economic environment could add months or even a year to the length of the nation's economic recovery.
Beijing is pledging to go carbon neutral by 2060 and renewables are growing in popularity, so declining coal exports was a reality Australia was going to have to confront sooner or later.
The Morrison government has increasingly asserted Australia's sovereignty and freedom from Beijing's influence, but doing so may come with a substantial cost.
