The suspension of Australian coal imports is part of a series of trade retaliations by China, angered by Australia’s call last May for an independent investigation into the source of the novel Coronavirus.
While the Chinese ban has hurt Australia’s coal industry, people and businesses in parts of China have been forced to bear intermittent power cuts and higher heating bills during the winter.
Since the beginning of winter, some parts of Beijing and Shanghai have experienced power outages, following some blackouts in Zhejiang, Jiangxi, Hunan and Guangdong provinces. It is reported that China has not seen such a large scale blackout in recent years.
According to the Financial Times, at least four provinces, including dozens of Chinese cities, have enacted new rules that include cuts in electricity consumption for both households and businesses.
Much of China relies on coal-fired coal for its electricity generation, but the current coal embargo in retaliation for Australia has left it without enough coal to generate electricity. This situation is commented as “kill a thousand enemies, self-loss of 800”.
The directors of China Huadian Group reportedly said that Australian coal is more efficient than other types of coal and that many local power plants rely on Australian coal, making it difficult to find alternatives.
China is the world’s leading coal consumer. In 2019, Australia accounted for more than 40% of China’s coking coal imports and 57% of its thermal coal imports. Australia exported nearly $10.4 billion worth of coal to China last year, according to statistics. In the first three quarters of 2020, China imported nearly 200 million tons of coal, equivalent to about 80 percent of its total imports in 2019.
However, China imported 260 million tons of coal from January to November 2020, of which more than 70 million tons were Australian coal, accounting for only about 1.9 percent of China’s total coal consumption, Huasheng Online said, citing the website of China’s National Bureau of Statistics.
Hu Xijin, editor-in-chief of Global Times, was quoted as saying it was “a little overestimated” to expect electricity shortages in much of southern China, where Australia accounts for a small share of coal imports.
From October 2020, Chinese ports have been instructed not to accept Australian ships exporting thermal and metallurgical coal, halting coal imports from Australia.
The restrictions have left at least 82 unloaded Australian bulk coal carriers with a total of 8 to 10 million tonnes of coal stranded at Chinese ports and more than 1,500 crew members stranded for months.
In addition, the coal ban affects China’s strong demand for other alternative energy sources, notably liquefied natural gas. After the ban, LNG hit an all-time high of $20.70 per million British thermal units, according to Forbes News.
China has also joined the rush to snap up gas but, ironically, Australia will be one of the main beneficiaries as it is the world’s second largest LNG exporter.
After Australia called in May 2020 for an independent international investigation into the source of the novel coronavirus, China became irritated and began a trade retaliation against Australia. So far, China’s retaliation against Australia has been in full swing, with banned goods ranging from coal, barley, wine, seafood, sugar, cotton, wool, timber, lobster, meat, tourism, education, etc.
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