Even after all the attempts and intimidations, China is still not able to find a way to get itself away from imports from Australia. Xi Jinping tried to sound all high and mighty and even went to the extent to make sure that Australia becomes really vulnerable economically in the midst of the pandemic. However, all of this spiralled and now as the trade numbers are out, it looks as if they were not even able to make arrangements to substitute the imports from Australia.
China’s imports from Australia rose by 49.3 per cent to $14.865 billion in April, accelerating from the 20.9-per cent import growth rate recorded in the first three months as the price of iron ore – a major item China buys in bulk from Australia – surged to a record high. While Global Times tried to spin the narrative by stating that, as China pushes diversification efforts, analysts said a trade decoupling between the two countries is imminent amid icy bilateral relations. However, the signs of increased trade tell the entire story.
Chinese President Xi Jinping is a small man with a big ego. And his ego problems are now killing China’s steel industry. Recently, China lifted its scrap steel ban for steel production, which was imposed in 2018 to avoid dumping of low-grade scrap ‘waste’. This is shocking. Till now, China was a world leader in the production and export of strategic goods, which is needed for almost everything from cutlery to aircraft, tankers and surgical instruments.
China sources 60 per cent of its iron ore imports from Australia. Australia itself is a world leader in iron ore production and exports, with miners like Rio Tinto, BHP and Fortescue dominating seaborne trade in the strategic mineral. Their only main competitor is Brazil’s Vale. But presently Vale is not operating at full capacity, due to a dam disaster at one of its sites in January 2019, and more recently, due to the Pandemic and incessant rains on its production.
But now, the paper dragon is losing its big advantage in the steel industry. Actually, Xi picked a fight with Australia, the country which supplies coal and iron ore- the main raw materials for steel production. Xi’s shortsightedness was starting to kill China’s self-sufficiency in steel manufacturing and it had to go back to the import of Iron Ore from Australia. China’s trade volume grew 26.6% y-o-y to 3.15 trillion yuan ($486 billion) in April, with exports and imports rising 22.2% and 32.2%, respectively: customs data.
In breakdown, China’s exports to Australia rose by 19.7 per cent to $5.25 billion in April compared with a year earlier, according to the Global Times’ calculation based on data released by the General Administration of Customs on Friday. That compared with a 50.5 per cent rise in exports in the first three months.
CCP mouthpiece tried to provide an explanation for the same. “The reason why China’s imports from Australia expanded in April is that China still buys bulk commodities from Australia, in particular iron ore whose price has been jumping to a record high. That, in turn, inflated the value of imports,” Chen Hong, a professor and director of the Australian Studies Center at the East China Normal University, told the Global Times on Friday.
However, given the way in which situations are heading, China is finding it difficult to make any amends and become independent in its dealing regarding Iron ore. Jinping’s attempts to hurt Australia keep backfiring as China’s imports from Australia increase by 49 per cent.