China-Australia relations: cotton clears Chinese customs on bets sanctions will end
- The A$900 million (US$621 million) Australian cotton trade ground to a halt in late 2020 after China imposed a series of official and unofficial restrictions
- China imported 20,000 tonnes of Australian cotton in 2022, compared to 400,000 in 2019, according to Chinese customs data
Chinese cotton buyers are buying up Australian product in anticipation the unofficial ban that decimated Australian cotton exports to China could be lifted amid a diplomatic thaw that has already seen trade resume in other sanctioned commodities.
Australian cotton is being shipped to a bonded warehouse in Qingdao and possibly one other location, by the Australian subsidiary of China National Cotton Group Corporation (CNCGC), one of the biggest state-owned Chinese cotton buyers, CNCGC Australia merchant Tom Zheng told Reuters.
If the unofficial ban is lifted, the cotton can be sold into the lucrative Chinese domestic market, he said. If not, companies in the duty-free zones can use the product for re-export.
It’s not a complete gamble because there is consumption in China in duty-free zones
“It’s not a complete gamble because there is consumption in China in duty-free zones,” Zheng said. “We expect the relationship to improve and the ban will be lifted.”
A trader, who spoke on condition of anonymity, said Australian cotton had been moving into China for months and small shipments had already cleared customs.
China imported 20,000 tonnes of Australian cotton in 2022, compared to 400,000 in 2019, according to Chinese customs data.
