The federal government has agreed to temporarily suspend its challenge against China’s tariffs on Australian barley through the World Trade Organization dispute process. (AFP)

The Chinese government has agreed to eliminate anti-dumping and countervailing charges on Australian barley imports from August 5, according to the Chinese Commerce Ministry.

"Due to the changing situation on the Chinese barley market, it is no longer necessary to continue to levy anti-dumping and countervailing duties on imported barley from Australia ... From August 5, 2023, anti-dumping and countervailing duties on imported Australian barley will be eliminated," the ministry said in a statement.

The decision was made after it was approved by the State Council's Customs Tariff Commission, according to the statement.

China put high tariffs on important Australian exports like barley, cattle, and wine in 2020. It also halted imports of some of Australia's most essential goods, notably coal, resulting in billions of dollars in economic losses. In response, Australia filed a complaint with the World Trade Organization (WTO), claiming that China violated international duties by excessively hiking tariffs.

The Australian and Chinese trade ministers met in February 2023 for the first time since 2019, demonstrating improved relations.

China lifted trade restrictions on Australian coal in March, and Australia decided not to file a WTO complaint against China the following month.

Despite the possibility of improved trade relations between Australia and China, tensions remain between Beijing and Canberra.

China is concerned about Australia's ambitions to buy nuclear submarines and it taking part of the AUKUS alliance, which was formed in an effort by the West to contain China. In turn, Australia claims that China is increasing its military presence in the Asia-Pacific region.