China said Friday it would remove extra tariffs on Australian barley, in the latest thawing of ties between the two countries after years of tensions.

Beijing imposed hefty levies on key Australian exports such as barley, beef, and wine in 2020, leveraging its economic muscle at the height of a bitter dispute with the then-conservative government.

It also stopped imports of some of Australia's most significant commodities, including coal, which curbed billions of dollars in trade.

But on Friday, China's commerce ministry said it was "no longer necessary to continue to impose anti-dumping duties and countervailing duties on imports of barley originating in Australia in view of changes in the Chinese barley market".

In turn, Australia said it would drop a retaliatory case against the world's second-biggest economy at the World Trade Organisation, which was paused earlier this year as the countries' trade ministers stepped up negotiations.

"We welcome this outcome, which paves the way for our barley exporters to re-enter the Chinese market -- benefiting Australian producers and Chinese consumers," Foreign Minister Penny Wong said in a statement.