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Turning Screws: China’s Australian Coal Ban

Overly reliant economies are dangerously fragile things. As it takes two parties, often more, to play the game, the absence of interest, or its withdrawal by one, can spell doom. The Australian economy has been talked up – by Australian economists and those more inclined to look at policy through the wrong end of a drain pipe – as becoming more diverse and capable of withstanding shock. In truth, it remains a commodity driven entity, vulnerable to the shocks of demand. Think Australia, think of looting the earth.

Such carefree, plundering optimism lays bare the jarring fact that Australia remains obsessively and maddeningly committed to King Coal. To coal, she pays tribute, runs errands and sponsors with conviction. And it is coal that keeps the country tied to hungry markets which, for the moment, see use for it. But such hunger is not indefinite. India and China, traditional destinations for Australia’s less than innovative dig it and export it approach, have made it clear that their lust for coal is temporary. The appetite is diminishing, despite occasional spikes. Renewables are peeking over the horizon, forming the briefing documents of energy and trade departments.

To this comes another problem. Australia has been rather bullish of late towards the country that receives most of its earthly treasures. The People’s Republic of China has made it clear that it does not agree with the ambitiously aggressive line Canberra has taken on a range of fronts. There is the issue of blocking Chinese influence in the Pacific, notably through the provision of alternative cyber infrastructure whilst excluding Huawei in bids to secure 5G telecommunications contracts. There has been a campaign to combat purported Chinese influence on university campuses and claims of meddling in the political process. (Meddling by the US, by way of contrast, remains gloriously free to continue.)

All of these acts have shown Beijing less Australia’s independence and sovereign will than its unqualified, traditional commitment to the United States, for which it remains undisputed, kowtowing deputy. What Washington dictates, Canberra disposes.

Which bring us to Australia’s lingering weakness. According to Reuters, customs officers of the Dalian Port Group have stopped Australian coal imports, specifically coking coal central to steel making, and announced a plan to cap imports at $A12 million tonnes a year. This comes after the noticeable increase in delays at Chinese ports handling both coking and thermal coal over the course of last year. So far, Australia’s coal problem seems confined to the northern port.

The anti-panic campaign is already in full swing, which might also be read as an alternate universe in motion. Prime Minister Scott Morrison insists that “people should be careful about leaping to conclusions about this.” Local ports make decisions on local matters; no reason, then, to break into a sweat. Treasurer Josh Frydenberg feels there is really nothing to see here. “Our exports with China will continue to be strong as they have been in the past.” Trade Minister Simon Birmingham has said, banally enough, that China was “a valued partner of Australia and we trust that our free trade agreement commitments to each other will continue to be honoured.” Hiccups have previously happened in the relationship (“occasional interruptions to the smooth flow”), but this was nothing compared to the common goal: exporting and using more coal.

Reserve Bank governor Philip Lowe prefers to focus on the amount of coal being stopped at Dalian as negligible and, in any case, transferrable. (The Dalian port receives some 1.8 percent of Australian coal exports.) “The amount of coal that is being blocked is the equivalent of two months’ exports from Australia to China. It’s entire possible that if it cannot enter the Chinese market then it can go to other markets.”

The justification from the Chinese Foreign Ministry remains vague, pegged to the language of regulation and quality reassurance. Spokesman Geng Shuang relies heavily on the issue of compliance. “China’s customs assesses the safety and quality of imported coal, analyses possible risks, and conducts corresponding examination and inspection compliant with laws and regulations.” In so doing, China “can better safeguard the legitimate rights and interests of Chinese importers and protect the environment.”

Geng was also in a playful mood. Did the reporter ask him on “coal” or “cow”? The issue is less amusing for Australian exporters, who have received special attention distinct from their Russian and Indonesian counterparts. This is despite the claim that there is a glut in coal, necessitating a temporary halt for domestic reasons.

The spokesman was also firm: China-Australia relations had not been impaired. “As we have stressed many times before, a sound and stable China-Australia relationship serves the common interests of both countries and peoples.” The subtext is hard to ignore: Canberra will need to be taught periodic lessons, bullied when necessary, and reminded about being too overzealous.

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13 comments

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  1. Jack Cade

    If Australia persists in being America’s toerag, it should not be surprised if US enemies target us. How long is it since we stood on our own two feet? 1972, it was. And we know what happened to that.!it wasn’t all down to Lizzie Bsttenburgs toady – the CIA was all over it, too. One coup that’s not usually credited to Uncle Sam.

  2. Peter F

    Jack – Do you recall that Whitlam was intending to speak on the subject of Pine Gap and N-W Cape? Are you also aware that the GG worked for the US in the islands north of us during the war? I believe that there propositions are fact.

  3. whatever

    Some history here, during the Hawke years various Liberal MPs would turn up here in Newcastle with a camera crew.
    They would head down to the beach to be filmed with the backdrop of coal ships dotting the horizon.
    “This is due to the unions and over-regulation” they would fulminate. They did this every 6 months, or so. For years and years.
    Well, the Port of Newcastle has a very narrow entrance and the ships have to line-up. You can only fit so many ships into any given port.
    This operational reality is considered some kind of Bolshie go-slow by the coal executives.

  4. Jack Cade

    Thank you, Michael. A feast indeed.
    In that period, I was working for an insurance company in Australia a that was wholly- or substantially-owned by a US company. Shortly after the words ‘Pine Gap’ became part of Australia’s everyday lexicon, the US parent took a passionate interest in its Australian subsidiary, and sent two at least if it’s ‘representatives’ here to examine its investments. I met each of them several times, and each was an absolute caricature of the idea I had of a CIA agent. Neither had the remotest idea of the insurance industry, but knew all about Australian politics. One even told me that he was a personal friend of Lyndon Johnson, and the other asked me if knew where I could get a copy of a book called Markings by Dag Hammerskoeld, a Swedish politician who had died in an air crash.
    I think he thought I was a communist. Certainly I’d expressed enthusiasm for the ALP programme.
    I had absolutely no doubt that each of the men were up no good. Thevvisits ended when the Whitlam government was dismissed.
    The crudeness of the coup, for that is what it was, showed just how sure of themselves the US were, and Kerr was a pantomime villain.
    I often wondered what they’d offered Fraser that they reneged on, that made him turn anti-American. Unlike Gough, I never forgave Fraser.
    Australia has never been the same.

  5. Jon Chesterson

    TIGHTENING THE SCREWS

    Looking at the bigger picture, there is another line of thinking here on China, coal and who is screwing who:

    China already knows what it does around climate change and in particular coal will affect its citizens every bit as much as the world at large. China also knows it is the biggest player in this division, US contribution is big historically but currently China holds the royal flush on this. China knows what it does will have the biggest impact too. China knows how it plays its cards geopolitically on this will gain it global recognition and influence and put it in the economic driving seat for advanced and Geo-safe renewable energy, transport and negative emission technologies of the future, the new exports.

    Logic and common sense based on these observations and arguably undeniable facts, which China has a lot more of than US will drive China to become the ultimate adjudicator on coal (and may be even oil, but not in the way you might think), and we need to think of India’s role here too, while Africa and South America will leap straight over coal and oil when the technology becomes available, and China will be the biggest provider and exporter by then, and South America have Venezuela, the largest oil fields in the world on their door step, for the shorter term. By powering down on coal now, China will be kick starting these global technologies, reducing its dependence on major imports and growing its new exports very rapidly. This will also put China on a new economic trajectory, when in recent years it has shown to have slowed down a little, first with transition from coal and then from oil.

    So what does this mean – It is in within China’s grasp, means and interests to shut down coal imports, but it will attempt to do so on its own terms, how and when, but this is the start of it. China is not going to tell us why until they are well on the path and ahead of everyone else. After all, they don’t to be this far behind as they have been in Space, and they already want to kick this into gear like the US did in the sixties, and there’s an opportunity here too. A secondary benefit is the outlying politics, the games so to speak like how the World or West is locking out Huawei, treating/arresting Chinese corporate executives, posturing strategically as China is in the South Pacific, and US trade sanctions, noting particularly other players like Australia’s gaming tactics. This coal business can be a useful trade carrot to dangle and optimise these other interests, all of which will become more important to them in years to come.

    Conclusion is – China will shut down coal, but it will play a game of cat and mouse until the tipping balance is reached and then call it out. So anyone who is worried about Australia’s collusion and reluctance to shut down coal mining because of export interests, needn’t be quite so worried, China will do it for them – No demand results in no supply chain and shuts down the purpose of production. The risk for China is allowing Australia to be in control of this over time, because when that time comes it won’t be in China’s best short term interests. Australia of course wishes to manage its risk by keeping coal powered fire stations open, thus securing demand, but that is a domestic issue which in the long term will deny Australia a place at the export table when it comes to the development of renewables and emission negative technologies including transport and fuel such as hydrogen and energy/battery storage. Once again Australia will be on the back foot, the dependent importer of technology. So we have two reasons to shut down coal as well as its two major production uses – minimising climate change and securing our economic future, both with compelling domestic and export arguments.

    I think it is obvious that China will ditch coal, question is how fast and does it want to score some global PR point points on the way and mediate the peripheral issues, which one day will take it centre stage. Australia however, particularly the Liberals are playing right into this game plan, in fact in some ways the Liberals are not so much a threat to China as they are collateral stupid and a threat to Australians. Keep the coal game open and play the cards like a poker player, and with a bit of luck and social engineering, Australia’s economy can be made to play entirely to China’s will from a distance, and when coals falters, when its use has served its purpose it will matter not to China.

    The Liberals are far too gullible and short sighted to grasp this, but it is the Liberals that will be our nemesis, not China. China is simply being smart. If Australia wants to play fair and stop the games and rhetoric, live less recklessly and dangerously, behave reliably, honourably and responsibly with China, that would be best for both countries and our region, and I think China is far more likely to reciprocate in the longer term than the US, which has been manipulating us since WWII, because it is by far the bigger player. The US doesn’t do anything that isn’t in its own national interests either, even with its so called friends (same game just much more covert and manipulative) and Trump has declared this populist chant loud and clear on the airwaves, and yet still we ignore the message, the writing on the wall. And we are fools to think US is friendly, it is the most hostile nation on earth – The US is building walls and waging wars all over the globe, even if many don’t want to because it can’t even control its own capitalist greed or internal affairs, conflicts and dissonance.

    Frankly, visiting the Great Wall of China is going to be far more educational, interesting and inspiring than the US southern border, and far more welcoming and friendly. So too is the prospect of trade and bilateral relations. We should be re-thinking our language, China isn’t so much turning the screws on us as doing us a favour and the world by shutting down demand for coal, secondary to its own interests – Now there’s a confluence, a thought to consider (it is in our best interests too, hardly a screw to torture us with). Coal is the enemy or more to the point, the enemy within driving coal – Those bloody stupid bogan Liberals, the Australia Coal industry and big Corporates like ADANI who don’t give a shit about any of this, as long as they can continue making billions at our expense, in both power and coking preferably.

    Coal should be limited for coking and steel production only and offset with the development negative emissions technology. Measures should be taken immediately to move to zero coal for power. If Australia doesn’t do this China certainly will do it for us. And we need to do the same for gas and then repeat this whole process for oil and the Middle East on the opposite foot, and learn this lesson from China – reduce our dependence on oil imports now before it is too late, and get above the game, because oil is next to go out of fashion. Getting us off that risk call card, which the Middle East will play, is critical to our future national security and stability – Far more so than refugees and the Liberal snake pit, sabre rattling, camel spitting lunacy of the Morrison government. The only screws loose here are in our Parliament, the head bangers, sand buriers, the stupid and complacent who vote for them – not China.

  6. Matters Not

    Re:

    Dag Hammerskoeld (Hammarskjöld alt sp), a Swedish politician who had died in an air crash.

    Well he was a Swedish politician but he was much more than that – being the second Secretary-General of the United Nations. He became the benchmark against which his successors were and are still evaluated. And yes, he did die in an air crash but whether that crash was accidental or caused by nefarious actors remains a mystery.

    As for the ‘book’ you mention – it was more a lifetime diary that was up to date – until almost a week before his untimely death. Certainly a diplomat of renown.

  7. Jack Cade

    I was aware only that he’d been killed and had no interest in him until that question was asked of me. It may well have been a perfectly innocent attempt to get a copy of the book. I only put two and two together after the Dismissal and the departure of the US agent (who wasn’t replaced despite a couple of years of representation.) Putting two and two may have got me five.

  8. whatever

    I think you people should stop drinking the KoolAid.
    What we have here is JunkNews (not exactly FakeNews) about commonplace port operations in China.
    If you start conflating any and every aspect of the Chinese economy into this vague ‘Trade War’ that Trump mumbles about, you have ingested too much JunkNews.

  9. Jack Cade

    I admit to a jaundiced view of anything involving the USA. It’s heading for a new Vietnam/Libya/Iraq etc with Venezuela, and our Coalition parties will probably tag along. Venezuela has 2 million soldiers. The USA has intervened in 80 or more countries since WW2, all in the name of ‘ freedom’ and ‘democracy’.
    China cares only about China, but builds its influence without force of arms, Australia thinks its the only source of commodities and occasionally needs a reminder.

  10. New England Cocky

    @Michael Taylor: Honi Soit exposed the Curr CIA connection about 1977. Alan Reed, former senior Canberra political correspondent, wrote a book about the Dismissal without referring to it, claiming to have covered all the known intelligence.

    Part of the present fuss about concealing the Queen’s papers from that time (1975) is that it appears that the Brits were being leaned on by the Yanks because Nixon, the US President bought by Hal Geneen, CEO of ITT for a $1 MILLION (in 20 x $50,000 individual corporate donations to the Republican Party), did not like the “socialist agenda” being pursued by Whitlam on behalf of the Australian people. Then there was the Pine Gap and other WA military communications base concerns in the uSA (United States of Apartheid).

  11. Andreas Bimba

    The world must cut CO2 emissions by 5% p.a. with a 2019 start date in order to not exceed the 2degC global warming limit. CO2 emissions are still increasing.

    If we just level off at the 2019 emissions and start cutting in 2029 then CO2 emissions will need to be cut by 9% p.a.

    If we started cutting in 2000 it would have only required 2% p.a. cuts in CO2 emissions.

    Delay therefore imposes huge economic burdens and greatly increases environmental damage and risks.

    It is reasonable to expect big per capita emitters in the developed world to make faster CO2 emission reductions than poor nations.

    A 1.5degC global warming limit is far less destructive to the environment and to human welfare than a 2degC limit and is the preferred target necessitating even faster CO2 emission cuts.

    These facts are incompatible with our coal and lng export projections.

  12. Jack Cade

    I spent two months in China last year. Although pollution is a major problem, they are acutely aware of it and are taking huge steps to address it. One city I visited – larger than any Australian City – will not allow petrol driven heavy vehicles inside its metropolitan limits and rosters private vehicles – by registration number – to specific days. The tourist bus I was on had to park 20 k from the city centre and we transferred to electric buses. Many commuters in many cities use electric scooters, which can be terrifying to a pedestrian; I called them ‘whispering death’. They use their headlights sparingly, being battery-powered.
    Australia’s self-importance cuts no ice in Asia. Politically they see us as US-oriented. Otherwise we are a quarry, and not their only market.
    China is undoubtedly a rising world power, but doesn’t see that power necessarily comes out of gun barrels. It is far more influential than the US was and is. China exercises influence by encouragement, trade and investment. While I wouldn’t want to live there, I wandered the back streets of Nanjing at all hours without any apprehensions whatsoever; I’d warrant that the same could not be said of any comparable city in the west. Certainly not in the USA.

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