Poor outlook for any improvement in China-Australia relations any time soon

In the latest development, two Australian journalists arrived back in Sydney this week after their employers, the ABC and the Australian Financial Review (AFR), deemed it unsafe for them to stay in China.

The ABC's China correspondent Bill Birtles, and Michael Smith from AFR spent several days sheltering at Australian diplomatic compounds, and were questioned by Chinese authorities as a condition of being allowed to fly home.

Tensions over trade issues continue to simmer, with the Chinese government recently demanding punitive tariffs on Australian barley, accusing Australian winemakers of dumping product and banning beef from several Queensland processors.

Meanwhile the Australian government has proposed setting up a public register where all existing government-to-government arrangements would have to be disclosed, then reviewed by the foreign minister.

Under the proposed foreign relations bill, agreements, such as Victoria's Belt and Road Initiative (BRI), could be terminated if deemed adverse to Australia's foreign relations.

Former Australian Ambassador to Korea and deputy head of mission in Beijing's Australian embassy Colin Heseltine said it was difficult to see how or when the relationship could be repaired.

"The Australian government has said it wants to see a constructive and co-operative relationship with China, but this is unlikely to happen any time soon," Mr Heseltine said.

"China will not stop doing the things that Australia opposes, and Australia will not become less opposed to these.

"Relations are now at the lowest point in recent history, and this is unlikely to change soon.

"The best approach for the federal government would, in my view, be to convey its concerns about Chinese actions and activities more calmly and quietly - less megaphone diplomacy, which is never likely to have any positive influence on a country of China's size and stature."

Mr Heseltine said other regional countries such as Japan, Singapore and Indonesia, all of which had problematic issues with China, had managed to convey their concerns while generally avoiding a severe and damaging downturn in relations.

"China's more assertive approach to its external relations over recent years, along with its tougher approach to domestic dissent, has given rise to concerns in many western countries," he said.

"The Trump Administration's strong opposition to China on trade, technology and security issues, and the circumstances of China's handling of the COVID-19 outbreak, have also played a significant part in building an atmosphere of hostility towards China.

"In Australia, perceptions of interference in domestic politics and in universities have been highlighted by certain academics, politicians and media commentators, and have added to growing mistrust towards China.

"The simplistic calls by some to find new markets, without any accompanying market analysis, to reduce our trade dependence on China don't help."

Mr Hesetine said China's critics saw the BRI as part of a grand Chinese security strategy to dominate the globe.

Instead, it was a domestically driven economic strategy, to utilise excess industrial and infrastructure capacity and to integrate China more into global supply chains.

"Without going into the validity of these competing claims, it is not surprising that those who are disposed to view China as a threat would see Victoria's MoU on the BRI in a negative light, despite its non-binding and economic-focused content," he said.

Mr Heseltine said more detail needed to be known about the content of the proposed foreign relations bill and how it would be implemented before assessing its impact.

"If it is simply a register to enable the federal government to understand and monitor the extent of linkages between Australian and overseas organisations (especially Chinese organisations) it should not be a cause for concern," he said.

"But if it becomes a device to close off, or discourage, valuable international exchanges, it will be detrimental to Australian interests.

"It is difficult to assess with precision the extent to which Chinese actions against Australian commercial interests are due to the deteriorating bilateral relationship."

The recent barley and wine anti-dumping actions and the ban on specific processors could be explained on routine technical grounds.

"However, their timing and frequency certainly suggest that other factors are at work," he said.

"Put another way, if the bilateral relationship with China was in good shape, would all of these negative issues have arisen at this time? Probably not."

Southern Metropolitan Liberal MP David Davis has questioned if the Victorian government's BRI MoU guaranteed primary producers would be shielded from punitive tariffs.

"In June we asked what action [the Victorian Government] would take to ensure there were no boycotts or tariffs imposed by the communist government in China on the importation of Victorian dairy or wine, or is this just a one-way street for Chinese construction firms?" Mr Davis said.

Agriculture Minister Jaclyn Symes has told state parliament the BRI was not a mandatory agreement.

"It is a facilitation of working arrangements," Ms Symes said.

"Am I concerned about restrictions on agricultural products from Victoria into China? Of course I am - everybody in the agricultural space is."

China was not a particularly big market for Victorian barley, with the bulk of exports coming from Western Australia, according to Thomas Elder Markets analyst Andrew Whitelaw.

"However, the removal of the market will have flow-on effects in that there are few places for barley to be transported to, which will maintain a ceiling on pricing levels," Mr Whitelaw said.

"Luckily Victoria has a domestic market."

The average Victoria production is 1.9 million tonnes, with the record in 2016 at 3mt.

This year it is expected the state will produce between 2.2 and 2.6mt.

State Opposition Agriculture spokesman Peter Walsh said Victorian wine producers, dairy farmers and barley growers had been hung out to dry by the state government.

Mr Walsh said Ms Symes couldn't detail any action she had taken for producers.

"We have learned the Agriculture Minister has sat on her hands for nearly four months and failed to stand up for Victorian producers," he said.

"These punitive tariffs have shut down Victorian barley exports to a major trading partner, despite [Premier] Daniel Andrews' promises on the benefits of Belt and Road."