What Happened: The Chinese government allowed three government-backed firms and the country's largest steel producer to resume imports of Australian coal, Reuters reported Jan. 4.

Why It Matters: Domestic demand for coal will rise once China reopens its borders and abandons quarantine measures on Jan. 8, which could imperil manufacturing industries if coal supplies are insufficient to cover the surge. As a result, Beijing is likely easing its ban on imports of Australian coal to ensure that production will continue unabated. This need also means Beijing is willing to take some steps to warm relations with Australia in a bid to repair the image that Beijing is an unreliable partner.

Background: China introduced a ban on key Australian imports, including coal, in 2020 after former Australian Prime Minister Scott Morrison demanded an investigation into the origins of COVID-19. Before the ban, Australia accounted for 30% of Chinese coal imports, namely high-quality thermal and coking/metallurgical coal.