China-Australia relations continue to be tense. Just as Australian wine and other industries were severely hit by China’s punitive tariffs, the Chinese steel industry, which is closely related to Australian iron ore, began to feel the pain caused by the trade dispute. The outcome of trade moves has not yet been determined. Picture: Retrieved from twitter (data photo)
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China-Australia relations continue to be tense. Just as Australian wine and other industries were severely hit by China’s punitive tariffs, the Chinese steel industry, which is closely related to Australian iron ore, began to feel the pain caused by the trade dispute. The outcome of trade moves has not yet been determined.
According to reports from the Deutsche Welle Chinese website, the price of iron ore has soared in recent days, injecting huge tax revenues into the Australian government. The total amount of iron ore imported from Australia by China each year is about 1 billion tons, even if the price is only one or two per ton. Fluctuations in the US dollar will have a huge impact on related industries in China.
Regarding whether iron ore may become the last “killer” to contain China, the Australian Broadcasting Corporation (ABC) recently analyzed that iron ore is Australia’s most powerful countermeasure weapon.
According to analysis, as the world’s second largest economy, China’s economic growth is mainly driven by infrastructure, such as real estate or high-speed rail. These industries all require steel, and iron ore is an indispensable raw material. Without iron ore, China’s economic growth rate will decline, unemployment will rise, and the ensuing social unrest will be the most unpleasant for Beijing authorities.
65% of Chinese iron ore comes from Australia. Brazil is the world’s second-largest iron ore producer, but after the Vale accident last year, production stagnated, making it difficult to replace Australia’s position for a while. Although there are abundant iron ore resources in China, most of them are “poor ore,” and the cost of mining is too high.
The analysis believes that it is not an exaggeration to regard iron ore as China’s “door”, and the anger of the Chinese steel industry in the face of soaring iron ore prices is also expected. There have been some voices on Chinese social media saying that Beijing’s “ruthless” tariffs on Australian agricultural exports are actually “killing one thousand enemies and self-defeating 800.”
On the other hand, some Australian public opinion opposes using iron ore as a lever to counter China. The Australian media “The New Daily” quoted international trade law scholar Giovanni Di Lieto as pointing out that for Australia, China is a huge export market for raw materials. Once the bilateral relationship completely collapses, it will be difficult for Australia to find Alternative market.
Dirieto said that Australia’s exports to Japan and South Korea have reached the highest level, while India’s demand is currently not enough to replace China. “It is a delusion to think that we can replace China with other markets.”
According to the US financial media CNBC, China is also seeking to diversify its iron ore supply sources. Shaw and Partners, an Australian investment consulting firm, believes that China is likely to pin its hopes on Guinea, a West African country, and has invested heavily in this.
China-Australia relations continue to be tense. Just as Australian wine and other industries were severely hit by China’s punitive tariffs, the Chinese steel industry, which is closely related to Australian iron ore, began to feel the pain caused by the trade dispute. The outcome of trade moves has not yet been determined.
According to reports from the Deutsche Welle Chinese website, the price of iron ore has soared in recent days, injecting huge tax revenues into the Australian government. The total amount of iron ore imported from Australia by China each year is about 1 billion tons, even if the price is only one or two per ton. Fluctuations in the US dollar will have a huge impact on related industries in China.
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