If Beijing wants a divorce then let’s give it a doozy

Via The Australian:

Uncertainty hangs over Australia’s $149bn in exports to China as a blockade of wine destined for the nation’s biggest trade show in Shanghai has heightened fears that a sweeping ban could follow within days.

More than a dozen wine exhibitors at China’s premier trade fair have had their products stopped by Customs since last week, crushing confidence in the outlook for the $1.2bn trade.

The industry’s anxiety was stoked as Australia’s biggest wine producer, Treasury Wine Estates, revealed on Wednesday that Beijing was considering further fin­ancial punishment for the $6bn, ASX-listed company.

The AFR:

Australian officials have raised China’s steep barley tariffs at WTO committee level in the past week as key industry players warn Beijing it is in danger of leaving one of its biggest state-owned entities out of pocket with any move against the wheat trade.

Farmers also want the Morrison government to do more to help after it rejected a grains industry budget submission for $20 million to help find new markets and reduce the reliance on China.

It is understood China has locked in up to 11 wheat shipments for December in deals done before a sharp rally in prices.

Cough up, ScoMo. That’s money well spent. Don’t bother with the WTO. This is personal. At CCP mouthpiece, The Global Times:

Chinese analysts believe the reported visit of Australian ambassador to China to the 3rd China International Import Expo (CIIE) in Shanghai, reflects Australia’s need for the Chinese market amid worsening diplomatic ties and its economic consequences.

The Australian Ambassador to ChinaGraham  Fletcher is reportedly to visit the CIIE, according to media reports. The visit came after China halted seven categories of Australian goods from the market.

But analysts warned that Chinese consumers’ confidence in Australian products would significantly drop if Australia continues to sabotage bilateral relations, which would cost Australia its best and biggest market, jobs and an opportunity to quickly recover from the pandemic.

Fletcher’s trip came after Bloomberg News report that China had asked traders to stop purchasing at least seven categories of Australian products – coal, barley, copper ore and concentrate, sugar, timber, wine and lobsters. The “most sweeping” halt will begin on Friday.

The news has apparently sent shockwaves to Australia.

…Former Australian Ambassador to China Geoff Raby wrote in his new book that the complementarities between the two economies “are so profound that Australia’s economic dependency on China will not change” unless Australians choose to accept a major cut in their living standards.

The former diplomat told The Guardian that Australia turning to other markets is “nothing more than wishful thinking.”

Great to see Mr Raby, Australia’s most accomplished China agent of influence, playing such a leading role in CCP propaganda again.

At this point, I think it fair to declare Australia’s policy of “strategic patience” with the CCP  a bit of a joke. China is not doing a trial separation, it has filed for divorce.

As such, we should be calling the lawyer to ensure we get as much out of this failed relationship as we can as it turns toxic.

Our best shot in that regard is to apply an iron ore export tariff. This year we will export about 750mt to China. Every 10% tariff that we apply at today’s prices will deliver $7-8bn.

We could go much higher if we want. Or, start there and ratchet it up every time a wolf wanker opens his potty mouth. It’s also a great way to be compensated for the virus damage China has inflicted upon Australia.

China will almost certainly react by cutting off all remaining exports but it’s doing that anyway so let’s get ahead of the game and extract some rent where we can.

A bigger concern is that the CCP’s next step will be to quietly threaten Australians in Hong Kong so we should announce the highest level of travel warning to HK in advance. Aussies in HK need to get out anyway. As the CCP made clear in Canada last week, western expats are hostages in all but name.

China will have to pay whatever price we put on iron ore. If it refuses to buy our dirt then the key building block in Chinese stimulus will collapse delivering a nasty poke in the eye to dictator Xi Jinping.

David Llewellyn-Smith
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Comments

  1. If Trump is finished, then Australia will be on its own in terms of confronting China. The US position on China will revert back to the Obama-Biden years.

      • Over the last couple of days I placed a couple of comments regarding the trade bans on SCMP and the aggressive behaviour of China to its neighbours. Here are a few of the replies.

        “And after taking this position, you still think we can be friends? 😂Amazing hypocrisy.”

        “I have never seen Chinese so strong and united in fighting US aggression, and since Aussies joined the fight, you are the enemy too.”

        “… 70yrs only shows you know little of Chinese history. Last 3000yrs, China is dynasty or civil wars, never democracy and the winner of last civil war rule is CCP. And after a few hundred years, someone else may challenge it for power. That is a tradition that goes back 5000yrs. As for Genghis Khan’s Mongolians or anyone else, the only ruler of all ancient Chinese lands is always the winner of Chinese civil wars and if they can defeat PLA, they can claim China too.”

        “Read the history of the SCS. For last 3000yrs, Chinese dynasties dominated these seas because we had naval ships when our small neighbours were still in boats. By the way, China only occupied 8 islands that were held by Qing China but Vietnam and Philippines had claimed over 20 islands. Do you see PLA attacking them. Our current borders are the ones that PLA is already occupying. Only one left to be retaken is Taiwan.”

        They are clearly bonkers.

        • I wake up everyday it’s a daydream
          Everythin’ in my life ain’t what it seems
          I wake up just to go back to sleep
          I act real shallow but I’m in too deep

          Bonkers

          Yeah, I always have a chuckle at the comments on SCMP. But hey, they are just barracking for their team. QUUEENSSLANNDER!

      • Australia has next to zero leverage. With the likes of Mike Pompeo and co. out of the picture and a more CCP-friendly president in the White House, ScoMo will cave and go crawling back to Beijing to ‘reset’ the relationship. Labor is already pushing this.

        • Scotty will have Gina and Twiggy whinging in his ear that the 20 % cut in ore sales to China means they have no spare money for their image building philanthropy!

          • Yep.

            Without American support, ScoMo will have little choice but to play nice with Beijing ie. kowtow.

      • You reckon the BHP.FMG and Rio might have something to say about doubling the cost of the products in China!

    • And the Obama-Biden years included suggestions like giving China full access to US missile technology – under the guise of joint space exploration.

      China can invade Taiwan as soon as Trump is gone and the worst they will get is sanctions.

      • My bet is some outlying roc islands will be flying a nice red and yellow flags.
        Not enough to start anything, ( kinmen, dongding, matsu ) salami slicings worked fine up to now.

    • Strange EconomicsMEMBER

      What a 10$ a tonne tax? Why thats are defacto resource rent tax, and stick it in a future fund.
      What – a liberal govt is going to tax the big miner donors?
      its a great idea though.

      It will only run for 5 years, till China fasttracks some African mine it can control. Then Iron ore sales and prices drop.
      Remember Fortescue got up in 5 years, with chinese contracts in place.

    • It would take while for China and the USA to get back in the pool together since Trump took a massive dump in it.
      They need to drain it, disinfect it and refill it before that happens. Even then…it’s tainted.

  2. CCP really getting itself into trouble. It’s becoming the world against them.

    They’re powerful, but not that powerful.

    • It’s becoming the world against them

      If the world is FVEY and those under the thumb of the US, well, then yes.
      That may be the large chunk of global financial and military power but very far from “The World”.

    • pfh007.comMEMBER

      China has more than enough iron ore of its own to make all the warships it needs.

      https://theglass-pyramid.com/2015/05/29/iron-ore-a-national-iron-ore-export-volume-auction-is-the-best-solution/

      What is far more likely than our hopeless bunch of policy makers making a move is that China will put a limit on imports of iron ore from Australia.

      They don’t need to cut all of it. Just drop imports by 10-20% from current levels and the smell of brown trousers down under will be epic.

      That will cause mass wailing in Canberra and a conga line begging for mercy and more sweet and less sour.

      The liberals did a fine job of making us single point sensitive and incapable of pulling ourselves off the Sino-Teat.

      Keep in mind that for years our policy boof heads insisted that we could not manage the price for our iron ore because it was a “commodity”.

      Australia – you are standing in it.

  3. ” policy of “strategic patience” ”

    Now that a very predictable, pro-china pro”free trade” Harris team will be in place, Dont you think, Australia will not revert to kowtow (US will have no motivation having Oz back for this) and get along with China’s interests?

  4. PalimpsestMEMBER

    1. China looks like it is going to go pretty hard at the moment.
    2. It is ‘at the moment’, because no one in any US administration is going to pay attention until February, and China is well aware of this. It looks like this has been planned for a while, both action and timing.
    3. While we are proposing reaction, we are dealing with an entity that has gamed this out in advance including move and counter-move. Be aware of that when suggesting action.
    4. Who knew we’d rely on Germany to watch our back.

    • Australia was the trade surplus that was always going to be targeted to reduce the US deficit with Chyna. This has been baked in for a few years but can now be seen as a bit of biffo for some perceived wrongdoing.

      We need a plan….. we’re fvcked

      • I think it’s obvious. Morrison should go. He backed the wrong bully and there’s no coming back from here. Morison is a lame duck now that Trump has gone. It’s not looking good for mate Boris Johnson either.

        • But Rupert and the Boy have it under control 🙁
          Murdochism will ride to the rescue of Trumpism, Bojoism and Scumoism. They are all facilitated by the same dirty digger.

      • Poop, scoop
        Whoop, whoopty-whoop
        Am I too complex for ComplexCon?
        Everything Ye say cause a new debate
        “You see, he been out of touch, he cannot relate
        His hallway too long, bitch too bad
        Gotta surrogate his kid, get two dads”
        I be thinkin’, what would 2Pac do?
        You be thinkin’ what New Kids on the Block do
        If you ain’t drivin’ while Black, do they stop you?
        Will MAGA hats let me slide like a drive-thru?
        That phone call from Ricky still hazy
        When heaven got an angel named Avery
        You gotta watch who you callin’ crazy
        Yeezy, the newest billion-dollar baby
        It won’t feel right ’til I feel like Phil Knight
        Goin’ for six rings like what Phil told Mike
        Seven pill nights, who know what that feel like?
        No more hidin’ the scars, I show ’em like Seal, right?
        How do you respond?

    • I'll Stir Fry You in My WokeMEMBER

      Not having Birmingham hold out an olive branch that’s sure
      he is as useless as a Collingwood supporter in a spelling bee

  5. I’m sure that once the lapdog the US was previous to Trump is back on the China leash courtesy of Biden the urge to bark will abandon our government post haste. Then it’ll be back to open borders ASAP.

    There will be no messy confrontation. We will be subsumed within a couple of decades maximum. There’ll probably be a World Government by then – steered exclusively by China of course – so it’ll be a moot point anyway.

    • The only thing holding Scotty back from opening the gates was the Vic CV issue, not defying China.

      Scotty’s masters at MCA and PCA have open doors to Chinese as their no. 1 priority activity.

  6. I said this in another thread but if Biden cancel s/ water s down the latest arms sales to Taiwan, that should tell us what we need to know.
    If he does we are in a bad situation in Australia, and the kow towing will begin in earnest.
    Been reading the latest Zeihan email and he seems to think china policy wont revert back to the previous Obama/Biden softness.
    “What foreign policy he has discussed focused on a degree of economic nationalism that is positively French. Biden’s anti-Chinese plans are far more adversarial than the Trump administration’s”
    I trust Zeihan has his finger on the pulse of the washington establishment better than most, certainly more than I.
    But i have lingering doubts, I cant just dismiss 8 years of history so easily.

    • Follow the money
      The largest US business lobby is now exclusively financing Democrat candidates. They could not stand Trump anti China stance, they fully expect the new admin to get back on track

  7. $20m to help find new markets?

    What is this BS, lol. Get off your lazy ar$eholes and do it yourselves, ffs. Can’t be bothered, let the taxpayer wear it.

  8. If it refuses to buy our dirt then the key building block in Chinese stimulus will collapse delivering a nasty poke in the eye to dictator Xi Jinping.

    LOL, the tariff can only go so much until it becomes viable for China to buy elsewhere.
    Sure it will slow Chinese economy if they have to pay more for iron but it will be devastating for Aus as the receipts from export will tank. Brazil will be excited.
    This is a lose-lose scenario and it is an ideological, not an economical assertion that we can punish China by limiting exports and not cause greater self-damage.
    At best, it would be a Pyrrhic victory.

    • The Chinese have very, very long memories and they conceptualise insults and threats in a different way to us. Until the start of this year all they really had against us was a belief (rightly or wrongly, let’s not get into the demand shock they unleashed on the commodity complex) they were overpaying for iron ore. We aren’t the British with their opium war. However regardless of whether or not China is able to exert a credible military threat to us in the next couple of decades, it is unwise to unnecessarily antagonise the Chinese and give them grist for vengeance in decades hence. Because they will remember and punish details and actions that most other nations would pass over, and it won’t matter whether it is the CCP or some other political organisation in power.

  9. If its a poke in the eye that hurts them and not us then surely it’s about that time to audit FIRB/ATO approvals of Chinese owned residential property. Black Diamondz client list is a good start. Then turn our attention to any Chinese owned agri-businesses, cattle stations and the like.

  10. I have no real problem with export tariffs however in this case it does imply that our major Exporters are leaving money on the table when they “negotiate” price for Iron Ore.
    In this sense it sort of amounts to imposing a Tax on our major Iron Ore exporters, which I’m guessing is something that they won’t be happy about.
    Experience suggests that when Rio, BHP, Gina and AF are all unhappy about the same thing, well lets just say things change. Is this a place where Scotty from Marketting wants to go?
    It’s worth remembering that these boys have form (sorry Gina)

  11. PalimpsestMEMBER

    We have a starting point for a plan. Germany has reached out, and we can engage Europe more strongly. This is more political support than economic, but essential to start some sort of effort. Economically we have companies urgently searching new markets. The prices will be lower, as well as volumes so it will be painful.

    The Chinese move appears to have been earlier than they intended, but the US election was a gift they could not ignore. China has been setting up high grade IO alternatives in Africa, but they are not online in volume yet. This was always going to come, but they would have wanted to include IO to create maximum shock. Something to look forward to.

    • PalimpsestMEMBER

      At time of writing the outcome for President and the balance of power in US Senate is yet to be determined. If a Trump administration the outlook for Australia is grim. US policy will be relatively uninterested in AsiaPac and the administration will happily substitute US exports for Australian, as they have recently. It was President T that tore up the interest in AP. His dealings with China have left China stronger and the US weaker.

      If a Biden administration and a supportive Senate then US foreign and defence policy will be more effective. It was the Obama/Biden administration that pivoted to Asia Pacific. Of course a Dem Pres and a Republican Senate means nothing will happen and no focus outside the US.

      That means the best case is an incoming administration, fighting bush fires, tackling a huge pandemic/economic mess with libertarians protesting any measures. Australia is suffering? We won’t make the small print on the back page for months. At best we can expect nothing from the Dems for months. At worst we can expect to be in competition with the US for sales as Pres T eats our lunch.

      • It was Obama who did nothing and watched China build its island fortresses across the South China Sea.

        The Obama Administration was happy to ignore China’s Belt and Road initiative debt diplomacy, its aggressive United Front activates, it’s stealing of western technology…

        Trump may be many things but he’s also the first Western leader in two generations who sees the CCP for the evil pricks they are.

      • “Pivot to Asia” wasn’t much more than a speech was it? And too late at that.
        We banned Huawei from our 5G network, Trump chopped one of Huawei’s legs off with the US chip ban.
        Are we to think that a more effective US admin would somehow make China buy our stuff? Give up any of their own trade gains (they’re the ones with the massive trade deficit) to do us a favor?

      • Rorke's DriftMEMBER

        We know through the hunter laptop that Biden is bought by China. He will stand aside whilst China rapes Australia in any way they like. They could invade Australia and the US would stand aside, if Biden wins. This is very serious for our future.

  12. Daft suggestion – its coming anyways. Don’t poke the Poo Bear.

    Biden is in, Trump out, our cover is gone for a short time in the transition, that’s when they will strike, early next year, for two months of Biden’s re-set the relationship/clock with China.

    Its clever strategy, and 18 months the making. And the political ramifications in Oz will be profound. Do not be surprised if big business migrates to the Labour Party. Not unlike what has happened in the US with the Democrats! Who incidentally spent more in advertising (~$11.3Bn) in this election than the previous four combined, and more than double than of the GOP.