The Australia-China Trade War: Who was it Good for?

One of the objectives of the Chinese government, which seeks indefinite rule, is to adopt an eco-friendly policy. China, which will host the Beijing Winter Olympics in February next year, added eco-friendly energy into local government evaluation to show Beijing’s clear sky worldwide. This means that local governments cannot burn fossil fuels recklessly just because they lack the power for evaluation. At the end of last month, out of 31 provinces in China, 20 provinces, including Guangdong, Zhejiang, and Liaoning, were restricted from the electricity supply. The Chinese government announced that there would be a power shortage at a “specific time, specific area” from the 27th of September to the 3rd of October. China is currently in the worst power crisis, and even the manufacturing plant is on the verge of shutdown because only two weeks of coal inventory for power generation remains. As the coal shortage in China intensifies, concerns are growing that the heating turmoil will occur ahead of the winter season at the same time as the power shortage.

However, environmental issues aren’t the only reason for the Chinese government’s regulation of coal usage. The Chinese government’s regulation began last year when they restricted Australian coal imports. China has imported more than 55% of coal from Australia by 2019. Australian coal is high-calorie coal, which is essential for thermal power generation, but the replaced Indonesian and Mongolian coal were low-efficiency coal, which significantly reduced power generation performance. As the power shortage intensified, the Chinese government began to recklessly purchase oil and natural gas, which led to skyrocketing prices of existing raw materials.

Relations between China and Australia began to deteriorate in 2018 when the Australian government excluded Chinese telecommunications equipment maker Huawei. In addition, Australia proposed an international investigation for the first time, citing China as the cause of COVID-19. Accordingly, China declared that it would retaliate against Australia. China accounts for about 32% of Australia’s total exports. After China announced economic retaliation against Australia, some Australian beef imports were suspended, and retaliatory tariffs were imposed at 80%. China also banned imports of Australian coal and nearly 10,000 tons of lobsters and wine, which China accounted for about 90%. The fight between Australia and China has caused a tremendous economic blow. Australia exported about 9 trillion dollars of coal to China last year. 80% of Australia’s iron ore exports are from China, and 60% of China’s iron ore imports are from Australia, and this statistic indicates how closely and economically the two countries have cooperated. However, Australia has been at the forefront of anti-China. China also declared an end to strategic and economic dialogue with Australia, and the relationship between the two is at its worst.

The two countries used to be great economic partners in the past, but now they are on the path of a security threat, and the effects that will follow are unknown. With the progress of globalization, the world is closely related to everything, rather than a self-sufficient way. It is rare for a country’s issue to stay within that country. And thus, wouldn’t the conflict between China and Australia be the cause of the rising price for raw materials? Such unusual signs continue to raise concerns and indicate that various measures have to be taken.

By: Seo Yoon Jung