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Changing China’s priorities pose challenges for Australia’s coal future

Xi Jinping President, has been promoting the model of “internal circulation” in order to move the economy. In other words, China produces and consumes it in its own country. “Since the global financial crisis of 2008, our economy has transformed into an economy in which internal circulation plays a major role,” Xi said in August.

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“In the future, the characteristics of the domestic market that guides the national economy will become more apparent.”

Today, the government is increasingly forcing utilities to buy locally, making them more competitive and stimulating the local economy, even if prices are up to 60% higher than Australian products.

There is no formal notice, instructions are given to energy providers only verbally, and the Australian Government hopes that if so, nothing will be written down as it will almost certainly violate World Trade Organization regulations. I have not.

The same is true for factories that have pumped steel for China’s infrastructure. The amount of Australian coking coal that combines with iron ore to make alloys surged 67% earlier this year. But the surge (and stockpiling of potential resources) has masked the looming underlying threat to our long-term exports.

A large new mine, Tabantrugoy, filled with coal of similar quality to Australia, will be needed for China to build its infrastructure when it opens next year, as the restrictions on coronavirus transport from neighboring Mongolia will be relaxed. It is expected to compete for supply.

There are more complex factors. Aggregate demand for coal can decline over time due to regional pressure on the “blue sky” outcome. It literally meant a smog-free day for Chinese leaders, which became more common as industrial production declined during the coronavirus pandemic. Pressure on supply will accelerate as China promotes net zero emissions by 2060.

Although the results are domestically driven, the political impact on Australia is still important, turning the Chinese market priority into a new tool of foreign influence.

Union and labor are currently facing major challenges ahead of the next election. In particular, Dawson, Queensland, Capricornia, Herbert’s seats, and New South Wales hunters.

Here, when the market says nothing to them, politicians tell voters that their future is safe.

Australia sends about a quarter of all coal to China. If China’s decline in demand is not offset by demand from other economies, especially Japan and India, the Union will be partly responsible for worsening relations with Australia’s Beijing.

Workers need to consider how to sell their post-coal work to voters who have significantly rejected plans for the last three elections.

Eryk Bagshaw is a Chinese correspondent for The Sydney Morning Herald and The Age. Due to travel restrictions, he is currently based in Canberra.

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Changing China’s priorities pose challenges for Australia’s coal future

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