China has been trying really hard to make an example out of Australia and to scare other countries about the consequences they will have to suffer if they try to go against the wishes of the Chinese Communist Party (CCP). However, trade numbers in Australia show a different picture– not what Xi Jinping would have imagined. The Chinese manufacturing demands have made the Australian Iron ore exports more than makeup for the losses which Xi Jinping thought he would incur on Canberra.
As per reports by Bloomberg, Australia’s iron ore earnings are on track for reaching an all-time high in fiscal 2021, with the government’s Department of Industry, Science, Energy and Resources raising its forecast by 27% to 123 billion Australian dollars on strong demand from China and ongoing supply disruptions in Brazil. This observation is very apt and interesting at the same time, as, notwithstanding the ban on the import of Coal and many other things from Australia, China has no other option but to keep importing steel from Canberra. And as the trade war escalates between the two countries, Chinese manufacturers are hoarding up the raw materials, along with steel, resulting in the strong demand of Australian Iron ore.
“With global economic activity rebounding, the demand for resources and energy is steadily rising, running down inventories built up at the height of Covid-19 lockdowns,” the report said. This has also brought to fore the dependence of Chinese steel manufacturing sector on the high-grade Australian Iron Ore supply and as they have recognised the same, they are hoarding the raw material to avoid the unforeseen situation where Chinese Communist Party and Xi Jinping decide to ban that too.
China is already facing the backlash of abruptly banning the long-established supply chain of Australian coal, as multiple provinces in China are abruptly facing power cuts and now these provinces are being rationed electricity, reminiscing the Mao’s era of a failed state.
According to The Australian, power shortages are increasing in China with millions of citizens resorting to rationing their heating over winter and avoiding using elevators. A Chinese energy insider told the publication, “You cannot pretend that bad relations between China and Australia haven’t contributed to this situation.”
The Chinese Communist Party has now arrived at a roadblock to its policy of hurting the Australian economy by making use of its monopoly of Australian export market and thus, it went ahead with the sweeping bans on Australian exports ranging from wine to barley and even coal. However, with these bans, Beijing ended up hurting itself and its citizens. And while China was playing strong by banning Australian exports, it did not ban iron ore and we already know the reason why.
If China wants to maintain its steel output and not hurt any more than it already is hurting, it just cannot do without the raw material. And as things stand, Australia has already made up for the losses incurred due to the bans by the increased consumption of Australian Iron ore by Chinese manufacturers and thus, has destroyed the whole Chinese plan.
