China is not coercing Australia, it’s severing ties

All my Christmas’s have come at once.  Via Bloomberg:

China has ordered traders to stop purchasing at least seven categories of Australian commodities, ratcheting up tensions with a key trading partner in its most sweeping retaliation yet.

Commodities traders in China won’t be able to import products including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster, according to people familiar with the situation. The government has ordered the halt to begin on Friday, one of the people said, asking not to be identified as the information is sensitive.

The notice was verbally relayed to major traders in meetings in recent weeks, one of the people said. Iron ore, Australia’s biggest export to China, won’t be included in the halt, the people said.

Here are Australia’s 20 largest exports to China with those being knocked on the head by Beijing in red:

All of these commodities will go through a period of adjustment as China swings its purchases to other sources of supply, opening new gaps for Australia to fill for other customers. Over time, most of the volumes will be shipped anyway and prices will ultimately find similar equilibriums.

Add to that, this:

A sharp decline in the number of part-time daigou operators in Australia is causing headaches for infant formula groups including Bubs Australia and Nuchev.

The ranks of the part-time daigou have been heavily thinned by a large slowdown in the numbers of international students in Australia, and a ban on tourists from China as part of broader government-imposed restrictions to fight COVID-19.

Those still plying their trade have been hit hard by rising freight costs to physically transport items to China for sale on e-commerce sites, leading to a further exodus as they decide it is no longer worth it. Experts estimated that between 120,000 to 140,000 daigou operators were beavering away in Australia 18 months ago when infant formula and vitamin demand was at its peak.

Marvellous. Fewer local shortages and fewer people-to-people links mean less influence. It is now very likely that students and tourists never return, either, once past the virus. Ditto for influence in the universities which will now die. Ditto for long term Chinese immigration which will now die. Chinese Australians can breathe a huge sigh of relief. The CCP claim over them just diminished greatly.

Iron ore will be crushed as soon as possible using scrap imports and Simandou. That will take five years so we should apply a massive export tariff right now to wish it on its way. That said, Brazil’s business model is close to busted and if another dam goes there may nothing China can do at all.

What we need now with urgency is China cutting off east coast LNG imports which would crater local spot prices and kill Morrison’s Gas Unplan with a gusher of supply. Please Beijing, hop to it!

Don’t kid yourself. This is not economic coercion. This is China is reversing out of Australian engagement at full speed. We’re past the point of no return. If we grovel now it will only get worse. Beijing has accepted that we are a US client state that cannot be bought and so it makes perfect sense to limit its risk exposure to us. A bit of punishment along the way is all to the good.

How bleedin’ fantastic is that! We are witnessing the saving of Australian democracy before our very eyes. Obviously, we can afford the price. Short term it will be relatively easy and get tougher as iron ore collapses. But that was always coming anyway so boorah!

For investment purposes, it means avoid any and every China exposed Australian business. Also, the Australian dollar is going fall a very long way over the next five years rebooting many of the tradeable businesses that we lost to China as it liberalised.

This is just as it should be. We backed China when it liberalised. Now we should withdraw as it collapses into a vicious tyranny.

That Bejing is doing it in lieu of our own sickening political carpetbaggers is a minor detail.

We are saved!

Houses and Holes
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  1. Can we get started on repossessing all China owned assets in Australia. Start with Cubbie Station and the Port of Darwin and proceed from there.

    • RobotSenseiMEMBER

      Amen. Or frustrate it to the point that yes, you can own them, you just can’t move anything in/out of them. Drive the price into the ground then buy it back for a token sum. Pleasure doing business with you.

        • Yep. No policy announced. All done through administrative measures. Just, you know, enforce the laws, but only at Chinese-owned operations. Now that *would* be China style. In Oz the go is usually not to enforce any of the laws. It’s enough to just announce them as a punter-shutter-upper. Animal welfare, anyone?

          • You’ll have to send our bureaucrats dictionaries with the page for “enforce” bookmarked and the entry highlighted.

      • SoCalSurfCreeperMEMBER

        Biosecurity issues in the port. Union troubles. Undiscovered, yet crucial, habitats for endangered species. Worksafe issues. Visa violations. Soil contamination. Culturally sensitive areas for indigenous Australians. Native title claims. Suspected human trafficking. Force them to hire endless expensive consultants and lawyers while work is crippled. Too easy!

        • I don’t think the CCP is too concerned about whether Port of Darwin makes them a profit or not. That’s not why they bought it.

          Instead, Australia should conduct a compulsory buy-back for any asset owned by CCP-linked Chinese companies or individuals.

          Further, residential property owned by Chinese companies or PR should be examined for source of income, and any assets purchased with income that cannot be positively identified as not coming from the CCP, directly or indirectly, should be included in the forced buy-back.

    • That’s the one.

      When does the selling off of valuable/strategic Australian assets to foreigners (especially who don’t share our values), for personal or career gain, become a criminal act?

    • pfh007.comMEMBER


      That will NEVER happen because our dull witted management class consider free capital flows and free trade with authoritarian police states to be non-negotiable.

    • Ronin8317MEMBER

      Not need. China will be divesting them on its own as the trade restrictions escalates. The only reason why the Chinese bought them is to export back to China after all.

  2. Once the pro-china Biden is in, Oz will have change its tune/apologize and everything will be back to normal

  3. Makes you wonder why China is having to run a ‘clean plate’ initiative at the same time, with Xi stressing the need for “gastronomic discipline”.

    • Yes, been wondering about that sort of thing for a while. They lost a heap of protein production.

    • They’ve lost a lot of food this year. Pigs to ASF, foul to bird flu, rice to floods, wheat to drought, and a bunch to corona via logistical headaches.

      A famine if they weren’t able to buy externally would be pretty likely. ie, under an insular leader like Mao: millions would die. Xi isn’t entirely insular, so he might make someone else starve Irish potato famine style. Plenty of food was exported while the Irish starved.

  4. pfh007.comMEMBER

    Just as well we did not waste the China boom by driving capital into unproductive house prices!

    Thank goodness that just yesterday the RBA prmoised more of the same smart policies that they have been delivering for years.

    Bring on the fight China we are ready for it.

    Jesus wept.

    • Come on Phf, cheer up! This is great stuff. The monetary issues will wash out over time. The banks are being nationalised and the system is on its last legs.

      We’re shot of China. Rejoice!

      • pfh007.comMEMBER

        There is more than some truth in that.

        1. The communist police state gives the western free trade nuts a lecture on political economy in relation to trade.

        2. The central bank of that communist police state is about to give a lesson on the public money power to the western private banking nuts.

        I am feeling better already !


  5. Ronin8317MEMBER

    The next step is the CCP ordering a complete trade embargo and stop export to Australia, which will resurrect the Australian manufacturing industry.

  6. Marvelous? Ah, no sorry it’s marvellous.

    That’s right, it’s M-A-R-V-E-L-L-O-U-S
    You heard me, M-A-R-V-E-L-L-O-U-S

  7. I’m waiting for an investigation into all the illegal house purchases in Australia bought by foreign investors. The maximum fines are large, but so far, large fines have never been imposed.

  8. PalimpsestMEMBER

    I’d disentangle a couple of issues here. Trade rebalancing – painful but necessary prov.ided we continue to have shipping lanes available. That will depend on the incoming administration including Senate. The current administration has presided over a sharp fall in US power and the rise and assertion of China power. We could probably reclaim the port now but in a couple of years that will mean a blockade.

    Cutting trade dependency on Australia may have a deeper implication. Remember it wasn’t a clever strategic choice on our end. Expecting a reduction in political interference or cyber espionage is a quaint but naive hope. Methods might change though.

    This all looks like a strategic reevaluation of how to deal with Australia, and a major change of tactics. After a couple of trial runs that brought no International or US response to help Australia, it’s a large expansion. If we still get no help (and the timing is clearly strategic) then the program will extend. I don’t like the way this is shaping up. The influence program will possibly even ramp up, but become more subtle. No champagne yet.

    • TailorTrashMEMBER

      Yes this has a long way to play out yet
      … the wh1e men of Asia need to be thought a lesson
      ……face needs to be saved
      All those bought Australians will be having their Lloyd’s
      moment .

    • Yup, agree. There is absolutely NOW WAY they will decrease their hold over Chinese in Australia. In fact if I was ethnic Chinese whose family hadn’t been in Australia for over 50 years I’d be sweating even harder right now. I can see China actually pivoting a bit more to getting their supplies from the US in the interim, to ratchet down pressure from that quarter while getting other potential suppliers up to speed to supply their market needs. I also think that they still hope to coerce Straya into their sphere of influence, but we are starting to see what the pointy end of that coercion might look and feel like, but we ain’t seen nothing yet. Getting Straya into their sphere of influence would be of immense propaganda value, both internationally and domestically for China. They can always backflip and say we aren’t total [email protected] once they do to make it seem like a bigger win. We really need to go full steam ahead on reducing our dependencies on international shipping lanes, so not getting in the way of the transition to renewable energy (and get as much of our domestic vehicle fleet onto electric as possible) and get onto 3d printing manufacturing asap as we should view ourselves like a developing country that skipped fixed telecoms infrastructure that went straight to mobile, we should go straight to 3d printing if at all possible. Pop the housing bubble, free up capital and let Aussie innovation take over. China is now obviously changed to an undeniable outright strategic threat, we need to adjust to this reality and quick

  9. Soon, Australian special forces will be setting demolition charges on another Brazilian tailings dam.

    • ErmingtonPlumbingMEMBER

      Maybe it’ll be Chinese special forces blowing those dams in Brazil on the orders of CCP factional overlords who have all their iron ore eggs in an Australia miner investment portfolio.

  10. Isn’t this just payback for the Huawei ban? Once the other Western nations followed Australia’s lead, and the damage to Huawei become apparent somebody had to pay.

  11. rob barrattMEMBER

    Does anyone think that our pollies are going to do anything? I wouldn’t be surprised if they offered Chinese investors government grants for puchasing Aus tralian property along with a groveling apology.
    The whvre will remain on it’s knees.

  12. This is not good news for Australia. At some stage Albanese will need to buy a ticket to Beijing and do a Whitlam.