State-run media has indicated in the clearest terms yet that Chinese authorities are limiting coal imports.
The Chinese Communist Party (CCP) revealed it is lifting customs restrictions on coal imported from all countries except for Australia.
The Chinese Academy of Social Sciences confirmed Australia used to be one of the Asian nation’s major sources of coal. However, the CCP is changing direction and will source coal from Mongolia instead because it is cheaper.
‘Losing’ Chinese market
“China’s major coal import source countries used to be Australia, Indonesia, Russia and Mongolia,” academy institute of energy economy director Yongzhong Wang said according to the state-run Global Times.
“Since Mongolia has a geographic advantage that allows lower transportation costs than any other exporters, it could take a large share from Australian coal, as the relationship between China and Australia has been deteriorating and Australia is gradually losing the Chinese market. Domestic suppliers can also grab some market share.”
The Minerals Council of Australia (MCA) is very concerned about Australian coal producers potentially losing business with China, and called on the CCP to trade fairly.
“MCA is aware of media reports from China that coal exporters from Australia face further restrictions,” MCA chief executive Tania Constable said in a public statement.
“The success of this relationship has relied on a rules-based trade system, which has supported many years of economic growth and job creation, especially in Australia’s regions. MCA encourages the Australian and Chinese governments to work together to resolve these issues and restore stability to the long-term trading relationship.”
Trade deal ignored
However, the Chinese Foreign Ministry refused to back down and claimed restricting Australian coal did not breach the existing China–Australia Free Trade Agreement (ChAFTA), even though the ChAFTA specifically bans “any prohibition or restriction or measure having equivalent effect, including quantitative restrictions, on the importation of a good originating in the territory of the other party, or on the exportation or sale for export of a good destined for the territory of the other party”.
“Recent measures taken by the Chinese authorities on some imported products from Australia are in line with China’s laws and regulations and international practices. They are also responsible steps to safeguard the interests of domestic industries and consumers,” ministry spokesman Wenbin Wang said in a public statement.
“We have seen many reports in which Australia dresses up as a victim, pointing an accusing finger at China, directly or by insinuation. This move is meant to confound the public and we will never accept it. In fact, it is the Australian side that has been politicising economic, investment and technological issues, and discriminating against Chinese companies in violation of market economy principles and international trade rules – it has gone so far down the wrong path.”
Mining giant representatives reportedly held a crisis teleconference to discuss all ways to deescalate tensions with the CCP, which has been accused of using economic blackmail to retaliate against the Australian Government’s criticism of the country’s poor containment of the worldwide coronavirus pandemic and human rights record.
Many coal freight ship operators have complained about China Customs forcing them to remain off the shore of China since May 2020, and postponing 74 vessels from delivering cargo worth a combined $1 billion.
Some ship owners have already sold the coal to new Japanese and South Korean customers, and are now considering to sue Chinese buyers for loss of revenue and rising operating expenses according to News Limited.
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