News Trade war: China formalises move to bypass Australian coal

Trade war: China formalises move to bypass Australian coal

China has delayed Australian coal imports.
China has added coal to its list of targeted Australian exports
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China has moved to formalise its restriction on the import of billions of dollars of Australian coal in the latest ratcheting up of trade tensions between the two nations.

The Global Times reported that China’s National Development and Reform Commission had indicated it would allow power plants to import coal without clearance restrictions, except for Australia.

China is in the process of reducing its reliance on coal, but now intends to prioritise supplies from Mongolia, Indonesia and Russia to meet its needs.

Global Times reported that 10 major power enterprises were told the coal purchase price should not exceed 640 yuan ($A129) per ton and it ordered plants to share inventory to reduce the purchase of “high-priced” coal in the market.

The newspaper quoted Wang Yongzhong, director of the Institute of Energy Economy at the Chinese Academy of Social Sciences, who indicated Mongolia could “take a large share” from Australian coal.

“China’s major coal import source countries used to be Australia, Indonesia, Russia and Mongolia,” he said.

“Since Mongolia has a geographic advantage that allows lower transportation costs than any other exporters, it could take a large share from Australian coal, as the relationship between China and Australia has been deteriorating and Australia is gradually losing the Chinese market.”

Australian coal worth more than $700 million had been held up at Chinese ports throughout November.

Dozens of bulk carriers have been stuck off the Chinese coast for months due to safety and quality inspections that appear to be aimed squarely at Australian exports.

Australia’s relationship with China has soured in 2020 as the Morrison government backed US moves against China, pushed for an inquiry into the corornvirus outbreak and took an outspoken stance on China’s territorial claims.

China has responded with tariffs and bans on Australian wine, barley, coal, copper, timber, lobsters and beef.

On Monday Senator Matt Canavan, a former resources minister, called for a 1 per cent levy on Australian iron ore exports to China. 

With iron ore exports currently booming, China watchers and economists who spoke to The New Daily said that idea was a ‘kamikaze’ option with harmful consequences.