Prime Minister Scott Morrison says the Government is still treating news that China has blocked Australian coal imports as "media speculation", while adding that if it is true, it would be a bad outcome for both countries' economies.
The nationalistic state-owned tabloid The Global Times has appeared to confirm that Beijing has blocked Australian imports, a move that could cost the Australian economy billions of dollars a year.
The report comes after months of uncertainty around the trade, with China unofficially banning Australian coal in October and last month blaming "environmental problems" for delays in processing imports.
Mr Morrison said if China had introduced a ban it would be a breach of the World Trade Organization's rules.
"Until we are in a position to have that clarified, then we can only treat [the news] as media speculation in the Chinese state-owned media," he said.
"It would be obviously in breach of our own free trade agreement [with China] and so we would hope that is certainly not the case.
"That is why we're seeking clarification on this … but obviously we take these issues very seriously."
The Prime Minister said while Australia had a diverse customer base for coal, losing the trade with China would be a multi-billion-dollar hit.
"It really is a lose-lose [situation] here because Australian coal, compared to the coal that is sourced from other countries, the other countries have 50 per cent higher emissions than Australian coal," he said.
"As a result, that would be a bad outcome for the environment.
"It would be a bad outcome for the trading relationship between Australia and China, that both countries benefit from."
Mr Morrison also said China risked damaging its global reputation as a trading partner if its acts of economic punishment towards Australia continued.
"If a perception emerges that there's a conflation between political issues and a trading relationship, then that can create uncertainty for many other trading partners," he said.
"I'm sure that's not something China's seeking to achieve here."
The Federal Opposition said the Government lacked a game plan to deal with the ongoing threats and sanctions from China.
"This is more about diplomacy than it is about trade," Shadow Resources Minister Ed Husic said.
"The other thing too, is having a game plan for a much more assertive China on the world stage.
"Working with allies and ally nations to deal with this.
"To be quite clear, what China is doing here is wrong."
More calls into Chinese authorities
Trade Minister Simon Birmingham said it was "unacceptable" for the Australian Government to find out about apparent bans through the media.
The move against coal is the latest in an escalating series of trade punishments meted out by Beijing and repeated requests by Senator Birmingham to speak to his Chinese counterpart have gone unanswered.
As well as tariffs on Australian barley and wine, exporters of Australian rock lobsters and timber have also encountered issues with getting their goods into China.
Foreign Affairs Minister Marise Payne said she would welcome the chance to speak with her counterpart in the Chinese Government and requests to do so had been made "consistently".
"We have been very consistent, very considered in the engagements that we have made, the comments that we have made," she said.
"We look forward to an opportunity to advance on these issues.
"I would say our diplomatic representatives in China, the ambassador and senior officials engage consistently with counterparts from China, they are very important conversations … and we will continue to do that."
The dispute is also taking a real toll on coal ship crew members, some of which say they have been stuck on vessels now for several months.
The Indian flagged M V Jag Anand was not allowed to unload its cargo of Australian coking coal at a Chinese port in June.
Crew on board, who spoke to the ABC on condition of anonymity, said Chinese authorities told them the coal is "poor qulity".
"Our condition is bad and getting worse," a seafarer said.
"I do have an injury in shoulder but not getting any medical attention. Another crew lost his father and could not go. Now his mother is suffering from cancer and in very serious condition.
"Only some miracle can save us now. We are at God's mercy."
