China seeds Australian economic civil war

Via Argus:

China has told some of its state-owned steelmakers and power plants to stop importing Australian coals with immediate effect, injecting more uncertainty into its spot markets that had anticipated eased restrictions into 2021.

A major northeast China state-owned steel producer received verbal notice of the ban this afternoon, but with few details available. Other details are still being communicated by authorities and will not be immediately available, a mill contact said.

Other mills in different regions of China have not been told to stop imports, but some participant said the policy could be progressively rolled out with mills notified one by one over the next few days or weeks.

A south China producer was heard to have confirmed the import curb on Australian coals, but the details could not be verified, sources said.

Tangshan and Shandong mills have yet to receive notification of the import ban, a Shanghai-based trader said. But it is having an effect as many buyers will shun Australian coal anyway, whether or not the ban is real, the trader added. “Meanwhile, enquiries on US coal are heard to be on the rise,” the trader said.

US miners and traders in the Atlantic have noted more enquiries for US coking coal, particularly following the end of the national day holiday in China yesterday. US coking coal prices have lagged the September recovery in Australian prices as demand in Europe remains muted, with mills still not back to full capacity. Recent demand from Brazil, Turkey and India have offered support but there remains a $17-18/t differential between the US low-vol fob Hampton Roads price and the Australian premium low-vol price today. Freight rates in the high $20s/t for coal Panamax shipments from the US east coast to north Asia and $11/t for Australia to China also translate to a workable arbitrage opportunity.

Blocking coking coal is new. That targets the economic coercion at QLD and NSW. Yet it was Manchurian McGowan that chimed in:

West Australian Premier Mark McGowan has taken a swipe at the Morrison government over its deteriorating relationship with China and the risk it poses to the mining industry.

Mr McGowan said it wasn’t in Australia’s interests to be “reckless” with a trading relationship that funded the nation, as WA authorities scrambled to deal with a COVID-19 outbreak on a loaded iron ore carrier bound for China.

“Australia needs to have a good relationship with China. It is not beyond us as Australians to do that,” he said.

Given it involves groveling to a CCP that overtakes the political economy with bribery, backroom deals and shady characters, it is definitely beyond Australians to do that. To wit, last week’s media campaign by agent of China influence, Geoff Raby, is cast in a new light. Recall from the AFR:

It is not often that a column by an Australian journalist is published in full, in Chinese, in China, especially only a day after its publication in Australia.

…The reprinting of the interview in the online journal, Observer, is official endorsement of Mme Fu’s comments. Not that there should have been any doubt about that. Her written answers to Smith’s questions would have been cleared at the most senior levels of China’s Foreign Ministry, if not within the leadership compound of Zhongnanhai itself.

…Forget Fu Ying’s reassurances that trade continues, and decoupling can’t happen because of the profound complementarities between the two economies will ensure enduring deep interdependence. These are commonplaces that Australian business, unlike strategic policy advisers, understands. The forlorn outlook for India as it struggles unsuccessfully with Covid-19 only reinforces this assessment.

…In the face of what everyone knows to be true, it is her statement that relations are not frozen and ministerial level contact has not been blocked which is the most noteworthy. It is clearly absurd. She knows otherwise. Trade Minister, Simon Birmingham, never tires of confirming the freeze, albeit in the most balanced and polite terms possible given the circumstances.

As I noted at the time, Raby works directly for Yancoal, one of those firms whose coal was very likely just blocked:

Registrant name Activity type Arrangement status Foreign principal Foreign principal country/jurisdiction*
Geoffrey William Raby Other activity (former Cabinet Minister or recent designated position holder) Active Yancoal Ltd China

Our loss of economic sovereignty is astonishingly complete. Yancoal owns the rights to the coal. It is majority-owned by State-Owned Enterprise, Yankuang Group. Thus, Beijing owns the rights to the coal and is blocking the output of its own miner while it offers the “hand of friendship” to unblock it. That hand is none other than our own former Ambassador to China, who has been employed by the very same Chinese SOE, who promotes the case using Australian media. (I’m not suggesting that Yancoal is the only target here).

Put that in your pipe and smoke it “Australia”, in name only.

This is exactly what we can expect to intensify. The CCP is going to do everything it can to provoke Australian civil war by freezing out the east and promoting links to the west. It bodes very poorly for the return of any and all China-dependent trade segments that predominate in the eastern states, including tourism, students and all commodities.

Then there is the accelerating hostage diplomacy:

Detained Australian writer Yang Hengjun is accused of espionage and his case is currently being heard by a Beijing court, China’s foreign ministry spokesman says.

The 55-year-old blogger was detained by Chinese authorities in January 2019 at Guangzhou Airport after arriving from New York.

He has been held in a Beijing detention facility with no access to his family, while his wife Yuan Xiaoliang remains in China.

Ready or not, China decoupling is upon us. If we’re not careful it will lead to Australian decoupling as well.

David Llewellyn-Smith

Comments

      • The Traveling Wilbur

        It does provide an essential service by giving Sydneyites somewhere to leave Sydney for without ruining the rest of the country in the process.

      • Bill – if Biden wins, Senate as well, expect a massive transition period… and Biden will want to re-set the clock with China of course!!!

        Tariffs on WA will be imposed! For national security reasons, as you would understand… You will quickly discover that Australia is greatest when it is whole… and some of those Victorian taxes may start to flow your way again.

  1. Is this coal import halt a mask for a collapse in demand in Chyna or looming dollar shortage?

    Joel Fitzgibbon is a fifth columnist. Purge the ALP of CCP stooges

    • Totes BeWokeMEMBER

      I can’t see a single Labor politician opposing what the party has become. They are all complicit and all must go. Is resetting Labor even possible?

    • Seems clear the Chinese are desperately trying to tighten their capital account and weaken the Yuan while avoiding a banking crisis. Good luck…something will break

    • Good point. CPP can pay their local miners in magical fresh printed Yuan.

      Something foreign coal suppliers are not so keen on taking in exchange for the nasty black stuff.

  2. pfh007.comMEMBER

    For all of those who think a lower AUD that buys less imports is a good thing, this is superb news.

    If only the Chinese would stop buying our other exports we could have a really low plummeting AUD and then we could rejoice as the prices of our imported cars, smart phones, TVs go up up up!

    Bring back the HQ Holden!

    • reusachtigeMEMBER

      LOLOLOL! We need a higher dollar so that good proper cars like BMWs and Mercs become cheaper. We don’t need to be making sh1t boxes again for unsuccessful types.

  3. reusachtigeMEMBER

    We are very bad at commerce. The simple rule that even the local fruit shop owner knows but of government doesn’t – “The customer is always right”. We should be doing everything China wants of us so as to maximise our profits. And we should do even more to make them love us that extra bit so we make bonus profits. It’s not hard, it’s 101 and they will love it !!

    • Charles MartinMEMBER

      You’re in a good mood.
      Are relations parties more successful with the onset of the warmer weather?
      Less shrinkage when you get out of the pool, I’m assuming.

  4. Chafta? What’s with the crickets in msm?
    No mention of behind border terrific sh!tf#ckery just we need to be nice to the rabid panda.

  5. I wonder when Gina and Twiggy (and Clive) will kick (roll) into action to have their tummies tickled by China to maintain their cashflow.

    • You can start by throwing everything that is ‘made in China’ out of your house. You will discover it’s harder than you think.

  6. Australia should be strengthening its ties with India. India simply cannot get enough energy and they are choking on coal. They need to switch to gas. And massive amounts of it.

    Australia has a gift horse looking right at it and they just don’t see it. India, not China, is the future…

  7. PaperRooDogMEMBER

    This happening at the same time as Yang Hengjun’s trial is NO coincidence, especially given the usual contradictary lies eg having “profound complementarities” not blocking Birmingham etc

  8. Maybe if we hadn’t blown up a housing bubble, WA, and by extension, Australia, wouldn’t be so dependent on China as the Australian economy could have been reformed in general. Now all we are left with is psychotic communists and property spruiker [email protected] Neither of whom are dependable in the long-run.

    • Maybe if we’d taxed mining and gas industries with a proper minerals resource tax over the last few decades we could have built a more diverse and resilient economy. The housing bubble was plan B and there is no plan C

      • Spot on. Should’ve had a sovereign wealth fund funded by our mineral and resource wealth.

  9. Wouldn’t this mean good news as it will lower house price here in AU or may be bring about a crash in RE prices that this countary so badly needs to reset everything? ?

  10. In my honest opinion.
    Mining is just a distraction which prevents Australians from achieving our true potential, so if China want’s to punish us by removing mining revenue we should respond by succeeding in other markets, not begging them to buy more dirt. Our sovereignty is meaningless if over 30% of our export revenue is dependent on a single other nation (a hostile nation at that) and dominated by a handful of products. Diversity by product, sector, market and position is what creates revenue stability, it is revenue stability that enables us to act as a sovereign nation and define our own selfish goals…there’s a word for this it’s called Freedom.

  11. I’ve been in the coal game for 21 years, seen good times and bad times. For last 10 years of that time I’ve flown in and out of mackay and see the coal port and how many coal boats are parked at sea waiting to be loaded. The last boom time there would be 60 plus boats, last downturn was 15 boats and normal was around 30 boats. 2 weeks ago when flying in I counted 10 boats waiting for coal. I knew then that something is going on and the global recovery isn’t what the news is telling the public. 10 boats is the lowest I’ve ever seen, most coal going out of that port is coking coal used for steel, so not much manufacturing going on globally. Coal boats off the coast has been my bell weather for what’s going on with the international economy

  12. Sandgropers think they’re carrying the Eastern states, Eastern staters reckon it’s the other way around? Vic thinks it’s the best, NSW had the numbers once? QLD reckons they’re doing a goodly bit too….? Historically the picture might have changed a few times?

    DLS – Is it worth a piece putting all states earnings/tax debate (per Capita or nom?) out for all to see who’s pulling what weight in what states & sectors currently, historically & projected?

  13. kierans777MEMBER

    > If we’re not careful it will lead to Australian decoupling as well.

    And where’s the leadership we desperately need in Canberra? A twice fired failed marketing executive or the criminals in his ministry? The affable Albo who wants to be everyone’s mate and is too scared of the next Murdoch scare campaign to actually put forward sensible reform?

    We are surely doomed.

  14. Gladys Got Some

    It’s just a steady progression from wine and cheese, beef, barley, now coal, and we know what is next on their hit list.

    Like a parent escalating a naughty child’s punishment — go to your room, now you’re grounded for the weekend, you didn’t do what you’re told I’m grounding you for a week (kid’s don’t get grounded these day but you get my point).

    Or maybe it’s just like Paul Keating said, China wants to do us slowly. There’s got to be some sport in it for them right?

  15. bolstroodMEMBER

    China intends to be 100% Carbon free by 2060 (far to late to be useful) but it will walk it’s carbon cutting back from there.
    It will not be back in the Australian coal market.
    All around the world nations are turning to renewable technology. Coals days are very limited.
    Like Tourism and “higher” education our coal exports to China are on the way out.
    Yes China is playing us off against the USA, by ordering more coal from our allly, and why wouldn’t they ?
    Instead of using diplomatic channels we have used a public megaphone .
    We have caused them to lose face
    .We brought a knife to a nuclear stand off

    • They are vacuuming up the Galapagos sealife as they announce their supreme greenness, pinch of salt needed?

      • Climate change is not just an environmental problem, it’s an agriculture and infrastructure and public health and water security problem. Dumbass economists hugely underestimated how much damage a few little degrees of average global temperature increase would do.