China shoots itself in foot with Aussie export ban

Karma continues to bite China in the backside, with more reports of blackouts across the country after its decision to ban Aussie coal:

Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.

Analysts said prices of the commodity in the country have shot up due to the reported crunch. The reports also follow rising trade tensions between Beijing and Canberra, leading some analysts to tie the coal shortages and blackouts to the unofficial ban on Australian coal…

China is the world’s largest coal consumer and its greatest source of coal imports was Australia… China is the second-biggest buyer of Australia’s thermal coal, a variety used to generate power…

Senior economist Marcel Thieliant at research firm Capital Economics said the blackouts are “underlining that China is willing to go to great lengths to harm Australia.”

Australia should drive the knife in further by imposing an export tariff on iron ore exports to counter China’s trade embargo on Australian goods.

China’s extreme dependence on iron ore to fuel its development means Australia holds the whip hand on trade (see here, here and here).

The Morrison Government should use this leverage to force China to end its aggressive trade sanctions.

If China won’t play fair, neither should Australia.

It’s time to punch the China bully in the nose.

Unconventional Economist
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Comments

  1. Rolling blackouts will cause more unrest amongst the populace than reduced employment in the medium term from reduced development, and they seem to be quite happily self inflicting that at the moment.
    I really think an IO tariff wouldn’t do much at all in the near to medium term except cause china to dig in harder to save face.

    • Nope,
      If the anger can be funneled towards leaders of the lapdog nation it can further cement the sentiment for a boycott.
      Energy source is already shifting north; I posted an aussie analyst link here showing that imports of coal from Russia is surging (it was deleted)

    • Know IdeaMEMBER

      Kyle Bass interviewed about a year ago a Chinese businessman who had fled China and was in hiding in the US. That businessman predicted that within twelve months Jack Ma would be in prison or dead. Mr Ma may hope for the latter.

  2. I think there should be a covid reperations tax on coal to the china to be paid up front before ship leaves Australia. Also right now we should be not making any overture to the china. Wait for them to beg us to restart shipments. Don’t take phone calls don’t negotiate. The longer the power is out in the cities the more pressure on panda man.

    • Crazy to go there, lack of information due to Aus media. Covid was in Spain round 2019. I think it’s pointless even thinking of of trails. or apportioning blame. There are bioweapon research facilities all over the place and constant leakage,.

      Bottom line right now we in Victoria have 600 deaths from Covid due to the allocation of security to a small unskilled security firm indinegenous owned, low paid untrained and creepy cheating infected “AusResidents” who spread the disease. And so many hospital staff have been infected, so many working 12 out of 14 days still. And we know, and can choose to stop it entering our country.

    • Know IdeaMEMBER

      From what I have experienced, I am not convinced the CCP would give a tinker’s cuss about what the Indians may or may not think about something.

    • How can Australia possibly backtrack? Will Scott Morrison issue and official apology? What sort of concessions will China accept? Can we deliver on those concessions?
      My guess is that this will quietly resolve itself.

      • Nasty bastards like that will do whatever it takes to gain a “win”. We still think there are rules, there isn’t, not to them.
        They will be calculating every move, and if they thought stopping iron ore would hurt us more than them, they’ll do it.
        We’re just complaining to the umpire and about to get smacked in the mouth by the bloke playing his last game !!

    • Donald Rumsfeld

      Canada, USA and Brazil all jumped in to supply the extra steaks, while New Zealand jumped in to supply the lobsters and extra wine.

      Australia was too busy begging them all to join in the foot shooting contest to notice they were all ignoring our stupidity and capitalizing on the opportunity.

      Its like Saudi Arabia refusing to sell oil to infidels who reject Allah – honestly it doesn’t get much dumber than Australian foreign policy, or at least whatever it agenda Macrobusiness is pushing.

      “Cancel all trade and just use MMT”

      – David Lewellyn-smith, Leith Van Onselen.

          • SoCalSurfCreeperMEMBER

            I disagree. I think US tastes are evolving to appreciate differences between various styles of steak. In wealthier areas you see the whole spectrum of choices including aussie and NZ grass fed right along side US grain fed Choice and Prime, wagyu etc. I’ve seen more NZ and Aussie beef lately, and it’s significantly cheaper (maybe 10 to 20%) than the domestic stuff. That said I’m sure the exchange rate will snuff it out pretty soon as the price differential will disappear.

      • Even StevenMEMBER

        Donald: you would have Australia toe the line? Bite our tongue? Be subservient? Like good Hong Kongers? Hahaha…

        I’m happy to pay the price required to maintain a modicum of pride.

      • It’s always easy to say we should just suck up to CCP and our problems will be solved. The trouble is, that will never be enough. CCP wants a vassel, not a friend (even a subservient one).

        The future of making concessions to China is for Australia to become a two-party version of Vietnam. Unpopular governments under Beijing’s thumb. Local freedoms lost. Economically dependent. Fully corrupted. Simultaneously abused while some local businessman make hay.

  3. Donald Rumsfeld

    From your article Leith

    “It was not immediately clear whether any of the blackouts actually happened”

    Lols.

    China is about 1/5th of the planet and there was a black out, MAYBE, in one city reported in the middle of December last year.

    Chinese demand for iron ore and coal is about to fall off a cliff as China resumes the import of scrap for recycling, imposes pollution limits, and the ramp up in steel requirements for the stimulus projects finishes – and at this point we should hurt our trade relations even more.

    Brazil, New Zealand, Canada, UK, USA, France, Germany and pretty much everyone else in the world are laughing their arse off at Australia right now jumping on board to fill the gaps as we shoot ourselves in the foot over and over and over again to appease El Trumpo.

    Good thinking mate – good journalism too.

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