What China wants in return for dropping trade sanctions

A shift in geopolitical winds, stemming from Washington, has China eager to prevent Australia from following the United States' new strategy.

In October, the United States cut off China's access to semiconductor microchips. The new rules appear to mark a major shift in the Biden administration's China strategy, and US commentators say the policy is designed to strangle China's high-tech industries.

Trade Minister Don Farrell is due to speak with his Chinese counterpart soon, the first such meeting in three years.

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James Laurenceson, director at the University of Technology Sydney's Australia-China Relations Institute, said the Asian superpower would seek confirmation Australia would not participate in the "economic containment" of China.

It raised concerns about the federal government ordering a review of foreign investment in Australia's critical mineral and rare earths sectors.

"Beijing is nervous we might do the same thing and limit access to lithium exports - 90 per cent of our lithium goes to China, which it needs to manufacture green technology," Professor Laurenceson said.

"There is some talk about Australia curving China investment and access to critical mineral supply in WA. They'll want to ensure they continue to flow as normal."

Over the past 18 months, the US has suggested it could drop its One-China policy, which recognises Taiwan is a part of China.

"There is no more core interest to China than the status of Taiwan... they will want to ensure Australia keeps its one China policy," Prof Laurenceson said.

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Former diplomat and Department of Foreign Affairs and Trade deputy secretary, Justin Brown, was Australia's chief negotiator in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Mr Brown said China wants to join the historic trade agreement - which represents 11 countries with a combined market of $19 trillion - and could seek Australia's support, or at the very least a lack of opposition.

"Chinese agreement to the full resumption of Australian exports could put pressure on Australia to adopt a less negative position on China's CPTPP bid," Mr Brown said.

"While the Morrison government stated that it would block China's application for as long as the trade barriers remained in place, the Albanese government has been slightly more cautious in the tone of its public language on the issue."

If China makes the expected requests, Prof Laurenceson said Australia would only have to maintain the status quo to deliver it.

"Historically we have welcomed Chinese integration into the region, not its containment - which is a point Foreign Minister Penny Wong made quite clearly recently," he said.

Senator Wong also confirmed Australia's commitment to the One-China policy in November, in a speech marking the 50th anniversary of Australia-China diplomatic relations.

The only ground Australia may have to cede is dropping its current anti-dumping action against China

Australia has levelled more than 100 anti-dumping measures against China since it joined the World Trade Organisation, and China is in the process of disputing Australia's dumping tariffs on train wheels, wind turbines and stainless-steel sinks.

"When we signed the free trade agreement with China, Beijing understood there would be fewer such actions, but there has been no let up at all," Prof Laurenceson said.

"That's irked China and they'll seek some respite on dumping access and trade actions."

Prof Laurenceson said the signs indicate China genuinely wants to reset the relationship, starting with dropping its wine and barely sanctions.

"By the end of last year, China realised its approach was not working, it was actually backfiring," he said.

"In that sense Beijing wants to back off on the trade sanctions, which were frankly only rebounding on themselves."