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China's Trade Bans Against Australia Hurt China

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Andrew, on October 20, 2021, made more interesting comments  

By coincidence, I watched a documentary on how Beijing's attempt to ban or raise tariffs on Australian goods has either failed to hurt Australia economically, or has, in fact, hurt China. China's power shortages after China banned Australian coal imports, in December 2020, is a major case in point. Apparently, Australia's coal is high quality and cheap, while Chinese domestically mined coal is low quality and expensive, and there are different types of generators which burn high quality vs low quality coal.  
 

In the absence of Australian coal imports China’s power companies need to buy expensive coal, which doesn't burn very well. The CCP laws keep electricity prices low, so burning more coal means greater losses for China’s power companies. Hence the power shortages in China since the station owners can't afford the turn the power plants on. 
 
Australia has found other coal markets, like India, Pakistan and Saudi Arabia. But it seems China has been buying Australian coal from them. China is therefore paying higher prices for coal that still ultimately comes from Australia. 
 
Australia also supplies a substantial portion of China's iron needs. The next largest supplier is well behind Australia. 
 
So, Australia would be able to hurt China by stopping its mineral and agricultural exports to China. And if the US and others blockade oil, I think China would be in for a world of short term hurt, and even more in the medium term. 
 
I don't think liquid natural gas (LNG) would be able to compensate for the fact that nearly 70% of China’s electricity needs comes from coal fired plants, not LNG. 
 
Pete Comments 
 
Bad news for China that China's attempted trade coercion of Australia has had so many downsides (especially regarding coal) for China. 
 
Your observation: "Australia has found other coal markets, like India, Pakistan and Saudi Arabia. But it seems China has been buying Australian coal from them. China is therefore paying higher prices for coal that still ultimately comes from Australia." is especially significant. 
 
Another observation: "So, Australia would be able to hurt China by stopping its mineral and agricultural exports to China. And if the US and others blockade oil, I think China would be in for a world of short term hurt, and even more in the medium term." may be a worry. 


One recalls impending energy shortages for Japan in 1941 leading to Pearl Harbour and Japanese invasions south. If similar shortages were aimed at China now might China be drawn closer to energy rich Russia or carry out violent actions? 


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