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While citing Aussie Agriculture Minister David Littleproud’s refrain from trade war with China, Global Times mentioned that the statement hints at the hope that the recent trade rows between China and Australia could be limited to barley and beef, unless there is a new conflict between the two sides. 

Key quotes

Given the principles of free trade and reciprocity to which China has long adhered, there are reasons to believe that China will not take the initiative to start a trade war so long as no party deliberately escalates tensions further.

However, we hope the Australian can release more goodwill and take more measures to repair its relationship with largest trading partner China.

It would be of little concern if Australia wanted to go to the World Trade Organization to seek a tariff resolution with China. Its willingness to get back on track to resolve trade disputes is welcome, because China has always supported the settlement of trade disputes within the framework of open and transparent international trade rules.

On the Chinese side, there is ample evidence to show its decisions on beef and barley imports were made on the basis of facts. According to Chinese statistics, Australia’s barley imports to China increased by 67.14 percent from 3.87 million tons in 2014 to 6.48 million tons in 2017, with the import price down more than 31 percent from $288.72 per ton to $198.05 per ton.

In view of past experience, China won’t be the one to take the first provocative step, but it should be noted that any further attempt to confuse malicious COVID-19 inquiries with trade would only exacerbate the tensions, driving bilateral trade off track.

FX implications

The news adds to the market’s cautious optimism, which in turn favors the Aussie strength. However, the fresh update on the US-China tussle seems to weigh on the risk-tone sentiment by the press time. That said, the AUD/USD pair seesaws around 0.6600 by the press time of early Thursday morning in Asia.