Iron ore price drives Australian exports to China fresh record high
The elevated iron ore price has continued to undermine Beijing’s sweeping trade retaliation campaign.
Australia’s exports to China hit a record high in January and February as the elevated iron ore price continued to undermine Beijing’s sweeping trade retaliation campaign.
The total value of China’s imports from Australia rose 8.2 per cent in the first two months of the year to $26.6 bn ($US20.5bn), according to data released by China’s customs agency.
That was up from $24.5bn ($US18.9bn) in the first two months of 2020, the previous record.
The elevated price of iron ore and liquefied natural gas — Australia’s two biggest exports to China — more than compensated for crippling strikes on wine, lobster, timber, barley, beef and even coal, Australia’s third biggest export to China.
“The fact that the total value of goods exports to China hit a record high during January-February speaks to China’s ongoing voracious appetite for Australian iron ore, and its inability to get iron ore from anywhere else,” said James Laurenceson, an economist and director of the Australia-China Relations Institute at UTS.
“Beijing isn’t willing to shoot its own steelmakers in the foot, or set aside its infrastructure-heavy stimulus support for the Chinese economy in order to make a political point to Australia,” Professor Laurenceson told The Australian.
For more than 11 months, China has banned and disrupted exports from Australia worth more than $20bn a year as it attempts to punish the federal government for calling for an independent inquiry into the coronavirus without forewarning Beijing, banning Huawei from the 5G network and a host of other policies its says are “anti-China”.
Highly China exposed industries such as the lobster, wine trade and timber trade — with a combined worth of about $3bn a year — have been devastated, raising concerns about rising unemployment in regional areas.
In a speech released last week, China’s deputy head of mission at its Canberra Embassy acknowledged that many previous advocates for the bilateral relationship had been caught up in Beijing’s campaign.
“Our friends had to bite the bullet,” Minister Wang Xining told an audience of business people at a Chinese Lunar New Year dinner.
The latest data released by Beijing did not break down individual products, but again revealed the complementarity of the two economies has complicated China’s campaign of trade punishment.
The record export numbers came despite the ongoing blockage of Australian coal — thermal and coking — which in 2019 was worth $14bn, almost 10 per cent of Australia’s total exports to China.
The Australian on Monday reported that Russia was positioning itself to replace Australian coal in the Chinese market.
Almost 50 ships loaded with Australian coal remain stuck off China’s coast, unable to unload their black-listed cargo.
The ban on Australian coking coal — a key ingredient in steelmaking, along with iron ore — has undermined the profitability of China’s steel makers.
Meanwhile, Australian coal has been redirected to South Korea, Vietnam, Japan and India.
Total Australian goods exported to China in 2020 were down 4 per cent to $148bn ($US114.8bn), the second highest level recorded.
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