Timber was among a slew of Australian commodities hit with import bans and restrictions as diplomatic relations between Beijing and Canberra soured during the height of the pandemic.
Xiao Qian told reporters in Canberra that China would immediately resume imports of Australian timber, which were stopped in 2020.
"Yesterday, the Chinese Customs have formally notified the Australian Minister of Agriculture that starting from today, China will resume import of Australian timber," Xiao said at a press conference.
The resumption of the timber trade, worth about Aus$600 million (US$400 million) a year according to government data, came as relations improved, he added.
"There are also other issues on the table that allow me to say that the momentum is positive."
Last week, the two countries' trade ministers met face-to-face for the first time since 2019, as the centre-left Australian government aimed to repair a relationship that had grown tense under the previous administration.
China, Australia's largest trading partner, blocked the import of its timber in 2020, citing the discovery of pests on shipments of wood.
But there were import curbs on other items too, including coal, barley and wine.
The restrictions came at a time when China was angered by Australia's legislation against overseas influence operations, its barring of Huawei from 5G contracts and its call for an independent investigation into the origins of the Covid-19 pandemic.
Relations appear to have warmed since Australia's centre-left government adopted a less confrontational approach to China since coming to power a year ago.
But Beijing and Canberra remain at odds on several issues besides trade, including the case of detained Australian journalist Cheng Lei.
When questioned over the continuing detention of Cheng -- who has been held for more than 1,000 days in China -- Xiao said the legal process was ongoing but he had "personal sympathy" for her and her family.
"I will continue to try my utmost to facilitate more access, that she could have some kind of access directly to her partners and their friends and families to let them know that she's okay."
Cheng, a former anchor at Chinese state broadcaster CGTN, disappeared on August 13, 2020, and was later charged with "supplying state secrets overseas".
Canberra has previously expressed concern about delays in Cheng's case, which many believe to be politically motivated.
Australian Treasurer Jim Chalmers welcomed the resumption of the timber trade and said his government had long called for the removal of Chinese restrictions.
"It's a crucially important market for us. We want to stabilise the relationship, and any progress in lifting these trade restrictions is welcome," Chalmers said.
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