It’s time we made our China play with iron ore

We need to send a subtle message to China. Luckily, we have an ideal way to do just that, says Terry McCrann.

A man walks near a bulk carrier cargo ship docked at an iron-ore transfer and storage centre operated by the Shanghai International Port Group in Shanghai. Picture: Bloomberg

Knock, knock, is anyone awake in Canberra? Or is everyone from the Prime Minister down focused on just counting away the days to a COVID-free Christmas and happy holidays to follow?

Is anyone there capable of understanding that we need to throw out the diplomatic trade and international organisation “rule books” in responding to, and dealing with, China?

That it is way past time where we grabbed the initiative?

Where we imposed some specific, precisely targeted, carefully measured, and most importantly one-way – that’s to say, in their direction – pain?

The perfect and very available weapon of choice is, as discussed last week, iron ore.

Just some minor tweaking could generate serious and, for China, alarming pain, while actually delivering an immediate and significant bonus to our iron ore producers and Australia more broadly.

Tweaking iron ore supply to China would work more as a “shot across the bow” rather than the declaration of all-out (to emphasise, trade) war which would be an extremely dangerous step for Australia to take.

For at the end of the day Australia does have to understand and accept, and then skilfully manage the reality, that we are a 21st century version of an economic vassal state of China. But that we can and indeed must be a feisty, more broadly independent, vassal – and with agreed and obeyed rules.

Even in the feudal reality – and brutality – of the Middle Ages, vassals had rights to be respected.

At absolute core, if we do not emphasise and demand our right to be feisty – that is to say, not only to be able to act in our own best self-interest but to retain independence of thought and action – we will quickly become hostage to China.

So, are we going to just let the months tick away, leaving it entirely to China to totally control the pace, the extent and the targets it chooses in its war on Australian exporters specifically, and “Australia” – the whole box and dice of us – ultimately?

First barley and coal, then wine and timber, lobster, beef, lamb, and on to who knows what next in a never-ending cascade of calculation and whimsy?

With our only response various exercises in fatuous inanity, like the PM going 150-proof indignation over the faked image? Or thinking (sic) that China will be cowed by assorted expressions of “Je suis ScoMo” from allies, or threats of taking China to the WTO (the World Trade Organisation).

Earth again to Canberra and the mixed assorted intelligentsia: any expression of Je suis ScoMo from the US has a use-by date of January 20; after that “Chinese Joe” becomes president.

As I explained last week, China is totally dependent on our rich Pilbara ore in a way that does not apply to anything else we sell to it – not even our quality met coal, headed for the same steel mills the iron ore goes into.

China literally can’t get it from anywhere else for at least five and arguably more realistically 10 to 15 years.

Iron ore and more particularly the billion tonnes of steel it produces is absolutely pivotal to everything in China as the lubricant keeping the economy functioning, as the glue joining both economy and society.

The beauty of an iron ore play is that it does not require a sledgehammer – our version of their 100 per cent tariffs – like slashing our exports, either in size or in extended time.

But just a tweak: like delaying shipments for a week or two; cutting exports across the board by, say, 5-10 per cent for a month or two.

The price would rocket. We’d actually get more dollars. China would get a powerful message.

Originally published as It’s time we made our China play with iron ore