Canberra on Friday denied reports Australian coal was being blocked from entering China, as the government sought to quell fears that worsening diplomatic tensions are damaging the nations' crucial trading relationship.

Industry experts have noted recently that China appeared to be delaying customs clearances for Australian coking coal used in steel-making, but a report late Thursday that ports in the northern city of Dalian had banned the shipments sent the Aussie dollar plunging.

China is Australia's biggest trading partner and coal is the resource-rich country's most valuable export.

Trade Minister Simon Birmingham said there was "no basis to believe that there is a ban" on Australian imports.

"We believe and understand that these are simple import quotas, consistent with what China has applied before and continues to apply and apply equally to all countries," Birmingham told reporters.

"This is not the first occasion where Australian coal exports to China have slowed in terms of the pace at which they are processed or assessed and let into the country... It is unlikely and unhelpful to try to conflate other unrelated issues."

He added that officials were seeking reassurances from Beijing that Australia was not the only country being targeted.

Prime Minister Scott Morrison said earlier that regulatory rather than political issues were at play and stressed there was "no evidence" any hold up of imports was related to other issues between the two nations.

There has been speculation about whether the delays have been about addressing domestic pressures, or retribution over Canberra's decision to ban Chinese communications giant Huawei's 5G equipment over security risks.

Canberra and Beijing have sparred diplomatically in recent months over the 5G ban, China's growing drive to increase its influence in the Pacific and the expulsion of a Chinese billionaire who donated to local political parties.

- 'Knee-jerk headlines' -

Central bank governor Philip Lowe said Friday it would be "concerning" if the diplomatic spats were spilling into the trading arena, but added that it would be prudent to "wait and see" what the motivations were behind the Chinese actions.

Lowe, echoing analysts, said it was also important to note that the current amount of coal reportedly blocked by Dalian was small.

China's foreign ministry spokesman Geng Shuang said late Thursday that Chinese customs were "conducting risk detection and analysis work on imported coal to ensure their safety and quality".

"The objective of this is to better protect the legitimate rights and interests of Chinese importers and to protect the environment," he said.

Coal shipped from Australia to Dalian Ports accounts for about 10 percent of Australia's exports of the commodity to China, and only two percent of overall exports.

Westpac senior currency strategist Sean Callow told AFP that while the Australian dollar dropped one percent to 70.90 US cents following the initial reports Thursday, the market was calmer early Friday.

"Those knee-jerk headlines of 'Australia's number-one export destination has a ban on Australia's number-one export' were enough to knock the Aussie lower," Callow said.

grk/dm/ecl

WESTPAC BANKING CORP

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