China has recently had tense relations with Australia and retaliated with tariffs and import bans on Australian goods such as wine, barley, lamb, beef, coal, lobster and timber. Yet it hurts China more than It hurts Australia. According to an estimate by the Australian Bureau of Agricultural and Resource Economics and Sciences, Chinese farmers are expected to lose A $3.6 billion, 11 times more than Australian farmers (a $330 million). In addition, China must buy coal from other countries at higher prices.
Australia did suffer hard in the short run from China’s tariffs, but in the long run it spread the pressure by dispersing the market.
“As Australia’s agricultural production shifts to other activities, exports of other agricultural products are expected to increase by 2025… this means that the overall value of Australia’s agricultural exports will decline by less than the loss caused by trade with China,” the BUREAU’s report said.
Since October, when China has informally banned Imports of Australian coal and steel mills and power companies have been told not to buy Australian coal, the price of premium hard coking coal in Australia has fallen by 22%.
But the attack also caused some self-inflicted wounds in China, a country that relies on coal to make steel, where coking coal prices surged to a four-year high last week. Mongolia, another major supplier of coal, was delayed as truckers crossed the border to undergo quarantine inspections in Wuhan. As a result, the price of coal produced in China skyrocketed, and China had to turn to other countries to buy coal at a higher price than Australian coal.
China’s tariffs on Australian goods have alarmed other countries. Malcolm Rifkind, a former British foreign secretary, points out that China has the advantage of challenging South Korea, Thailand and even Japan one-on-one; But in the real world, in such situations, potential victims pull together to ensure a collective and coordinated response.
Australian nationals are also boycotting Chinese goods and calling on their companies to leave China.
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