Paul Antonopoulos, independent geopolitical analyst
Since October, Australian media has been saturated with news that China has unofficially banned Australian coal imports, leaving dozens of bulk carriers stranded offshore. However, not noted in Australian media is that Russian coal supplies to China increased by a massive 28% in October. Australia, another major global coal exporter, has been endlessly antagonizing China on behalf of Donald Trump. Decisionmakers in the Australian capital of Canberra naively believed that the Asian country was reliant on Australian coal for energy consumption. Australia now sees China, its largest trading partner, turn to Russia for the black rock to compensate for reduced exports. Coal miners in Russia’s Kuzbass, Yakutia, Khakassia and the Far East will be happy with this development.
Braemar ACM Shipbroking analyst Abhinav Gupta said that Australia's export of coal in the fourth quarter declined by 82% from year on year. Australian Prime Minister Scott Morrison even attempted to portray his country as a victim of Beijing’s so-called discriminatory policy that supposedly violates open market laws. This is despite Morrison being one of the strongest supporters of Trump’s trade war against China.
However, not only does Morrison support the U.S.’ trade war against China, his government has been one of the loudest critics against Beijing’s so-called human rights abuses in Xinjiang, supports Tibetan independence movements, pushed for an enquiry to blame China for the COVID-19 pandemic, and restricts Chinese technological companies from accessing Australian markets.
While countries are phasing out coal production and switching to environmentally friendly sources, the extraction of this mineral is archaically the cornerstone of the Australian economy. Australia extracts over 500 million tons of coal a year, 75% of which is exported. In 2019, local coal miners exported $53 billion worth of coal, contributing about 8.3% of the GDP.
For many years, Japan was Australia’s main purchaser of coal, buying $17 billion last year (27% of total exports). China is the second biggest market with $13.7 billion (21% of foreign trade). The loss of such a market will lead to a crisis in the mining industry and has already created serious problems for the Australian economy.
China has repeatedly imposed temporary restrictions on Australian coal imports, but always lifted them in the hope that Canberra would end its antagonizations. As Australian provocations against China continues, Beijing slapped tariffs on Australian wine and barley exporters and put restrictions on coal, lobster, timber, red meat and cotton exports.
If the current restriction continues, Canberra will have serious problems because there is simply nothing to replace the Chinese market. Japan and South Korea plan to achieve zero greenhouse gas emissions by 2050, thus decreasing their coal imports. India continues to have ambitious plans to become a major steelmaker, but New Delhi buys coal from a variety of locations, including Australia’s biggest competitors, Indonesia and Russia.
Given the friendly relations between Moscow and Beijing, as well as China’s increasing confidence in responding to Western provocations, Russian coal will likely replace much of the imports that came from Australia. In addition, China is trying to lock in a major multi-year supply agreement for hundreds of millions of tons a year from Indonesia. China has effectively prepared for a post-Australia coal supply, which will severely hamper the already struggling Australian economy that has been battered after decades of neoliberal reforms.
China is by far Australia’s largest trading partner, accounting for 39.4% of goods exports and 17.6% of services exports between 2019 and 2020. The Australian economy was badly hit by the pandemic, and senior economist Marcel Thieliant of Capital Economics warned that “While Australia should be able to divert some shipments to other countries, the escalating trade war is another reason why Australia’s economy will never return to its pre-virus path even once the pandemic has been brought under control.”
Although Australian Federal Treasurer Josh Frydenberg continually alludes that the economy is rebounding strongly, the June quarter collapse of gross domestic product (GDP) was 7.0% and the so-called recovery in September was less than half of that at a tiny 3.3%, Independent Australia reported. As they said, “that is among the world’s weakest.”
As the publication also outlined: “Australia is one of very few developed nations – along with New Zealand, Taiwan, Singapore and Brunei – to have defeated the coronavirus. So there is no excuse whatsoever for this disastrous deterioration in economic outcomes and no basis for shifting the blame elsewhere.”
With having every advantage to be one of the leading countries for economic growth despite the pandemic, Australia’s recovery is stagnant, and will only worsen as China begins exacting revenge against Canberra’s ardent backing of Trump’s trade war. As Thieliant revealed, goods and services that are already “in the firing line” are worth almost a quarter of Australia’s exports to China, and the Asian country is likely to double down on tariff’s against other Australian products.
Morrison announced in June, despite the pandemic and the failing economy, that Australia would waste over $200 billion over the next decade on its military, hampering economic recovery as this sum of money could have been redirected into more productive sectors of the economy, such as green energy and high-tech niche manufacturing.
Former Major General and Senator for the ruling Liberal Party, Jim Molan, said only days ago that Australia is “likely in the next 3-5 years or 5 to 10 years, to be involved in a war between China and the United States.” Peter Jennings of the Australian Strategic Policy Institute concurred with Molan's belief that Australia is at the brink of war, stating “it is certainly a much higher risk we've seen in a long long time.”
Molan of course omits that China has not been at war since 1979 while Australia was directly involved in the U.S. invasions and/or aggressions against Afghanistan, Iraq and Syria, to name a few. It is for this reason that although Australia economically relies on China, the current political elite serve the interests of the U.S. at the expense of its own citizens. While Australia will continue the path into economic obscurity, China will look elsewhere to replace Australian products. Russia, another country that Canberra antagonizes by imposing sanctions against it, may turn out to be the biggest winner, without Moscow even having to mention a word or be involved in the Australian-Chinese crisis.
