Australia’s official figures show that exports to China hit the second highest level on record in 2020.
Since the Australian government proposed an international investigation into the source of the Wuhan pneumonia outbreak, Beijing authorities have retaliated in many ways by halting imports of goods and imposing high tariffs. However, official Australian data show that exports to China hit the second highest level ever in 2020.
Foreign trade data released by China’s General Administration of Customs on Jan. 14 showed that Australia exported A$148 billion ($114.8 billion) of goods to China in 2020, despite sanctions on commodities such as coal and lobster, high tariffs on barley and wine, and a ban on timber imports.
Official Australian figures show the damage caused by the Beijing authorities’ nine-month onslaught of trade attacks on Australian goods was A$6 billion, a drop of about 4 percent. 2020 saw the second-highest level of Australian exports to China on record, with a record high of A$154 billion ($119.6 billion) in 2019 and nearly 10 percent higher in 2020 than in 2018, which ranked third .
According to The Australian, Australian Resources Minister Keith Pitt said he was disappointed with the current impasse between Australia and China. 1500 seafarers on 73 bulk carriers are stranded off the coast of China with more than $1 billion worth of Australian coal on board and unable to clear customs.
The coal is owned by Chinese buyers and managed by the Chinese Communist authorities in terms of offloading, but exports from the Australian industry remain strong,” he said. Coal companies have experienced these challenges before and are now developing their own contingency plans.”
The damage caused by China’s trade actions has been largely offset by higher iron ore prices. Australia accounts for more than 60 percent of iron ore sold to the Chinese steel industry (worth about A$85 billion), mainly from BHP Billiton, Rio Tinto and Fortescue.
Iron ore exports are one of the pillars of the Australian economy. in the 2019-2020 financial year (ending in July), Australia earns $102 billion from iron ore exports and provides 65,000 jobs. Of this, China’s imports amount to $84.9 billion.
Australia is also the world’s top iron ore exporter, with the country’s share of exports accounting for 60 percent of the world in fiscal 2019-2020, with Brazil in second place at 21 percent, followed by South Africa at 4 percent, Canada at 3 percent, and India at 2 percent.
China imports more than 1 billion tons of iron ore from overseas each year, and a fluctuation of 1 yuan per ton in the price of iron ore is a change of more than 1 billion yuan. And the rise in iron ore prices in recent months has affected the profits of Chinese steel companies by hundreds of billions of yuan on an annual basis. Large Chinese steel companies unanimously called on the Chinese Communist Party last month to take effective measures and intervene in a timely manner.
Data released by China’s General Administration of Customs on Jan. 14 showed that China imported 1.17 billion tons of iron ore in 2020. This surpassed the 1.069 billion tons in 2019 and the previous record of 1.075 billion tons set in 2017.
In addition, LNG, Australia’s second largest export to China, worth around A$16 billion per year, is also unaffected by LNG sales during 2020. Australia is China’s largest supplier of natural gas, with ASX-listed suppliers including Woodside Energy, Santos and Origin, which supply more than 40 per cent of China’s imports of this strategic resource.
Lawrence (James Laurenceson), an economist at UTS (University of Technology Sydney) and head of the Australia-China Relations Institute, said the annual export figures showed that China had so far been unable to cause full harm to the Australian economy.
He said, “Of course, in making this assessment, we have also warned about the significant losses faced by particular industries.”
For example, when China imposed a 212 percent tariff on Australian wine late last November, the A$1.3 billion wine export industry came to a halt overnight, while the A$600 million lobster trade suffered similarly.
But if the aim was to make these particular industries political lobbyists for Beijing, the evidence also suggests that the strategy has failed miserably,” Lawrence said. Certainly, in the minds of the Australian public, it has failed.”
The ban on Australian coal has forced Chinese users to pay a nearly 40 percent premium to secure supplies, after an unusually cold winter in late December when coal shortages led to power outages. It has also sent the cost of coking coal soaring for Chinese steel companies.
On Jan. 16, a number of media reports, including French broadcasts, said that although China has banned Australian coal imports, it nevertheless imports Australian coal through other countries. The coal industry revealed that China is now importing coal from Russia, Indonesia, South Africa, India, and Pakistan to fill the gap. In fact, most of these countries are importing coal from Australia and reselling it to China again.
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