Thursday, February 21, 2019

China Has Banned Australian ­Coal As Huawei Tit-4-Tat

A coal dredger transfers coal from a storage area onto a conveyor at the Sahiwal coal power plant, owned by Huaneng Shandong Rui Group. Photo: Asad Zaidi/Getty Images.
China has banned Australian ­thermal coal exports from ­entering five ports, in a provoc­ative strike at the nation’s top expor­t earner, sending the ­dollar into a dive. Trade Minister Simon Birmingham last night ordered a ­urgent investigation by Australia’s ambassador in Beijing, Jan Adams. Security experts warned that the indefinite halt on Australian coal exports at the large northern port of Dalian and four nearby ports could be linked to recent diplo­matic tensions over the ban on Chinese technology company ­Huawei and investigations into cyber hacking. The dollar tumbled as news of the ban emerged, falling more than 1 percent yesterday to a low of US70.86c. 

Chinese authorities began ­imposing the monthly restrictions on new coal imports from about mid-November. Ministry of Foreign­ Affairs spokesman Geng Shuang said China had been conducting a “risk monitoring analysis” program on imported coal to “safeguard the legitimate rights and interests of Chinese importers and to protect the environment.” Asked specifically if the review was targeted at coal from Aust­ralia, he repeated the prepared statement, refusing to elaborate on the nature of the review. Aust­ralian ­officials conceded reports of China’s ban had already had “an impact” on currency markets. 


The Department of Foreign ­Affairs and Trade’s North Asia head Graham Fletcher told a ­Sen­ate estimates hearing last night: “I know this is a very serious issue … there are market implications in terms of currency. Today there is quite some confusion about what exactly is happening ... the uncertainty is having an impact.’’ The ban signals a dramatic step-up in action by Chinese authorities to target Australian coal after a backlog developed in the past few months of foreign coal waiting on bulk ships off ports in China awaiting customs clearance. The indefinite ban on imports involves five harbours overseen by Dalian customs — Dalian, Bayuquan, Panjin, Dandong and Bei­liang — and threatens to ratchet up trade tensions between the two countries. Australia last year ­exported about $2.1 billion worth of thermal coal to those five ports.

Chinese officials told the industry yesterday that, by the end of this year, coal import volumes to the five ports would be limited to 12 million tonnes. Coal from ­Russia and Indonesia would be ­allowed but other countries’ ­exports would be excluded. The Australian Strategic Policy ­Institute’s executive director, Peter Jennings, said there was a “pattern of behaviour” by China in hitting Australian trade when Beijing was unhappy with Australian government policy. “I think it is an example of the sort of bullying behaviour you’ll get from Beijing when it finds countries taking decisio­ns that it doesn’t like,” Mr Jennings said. “It also makes very clear that there is no separation between Chinese business and Chinese politics. “So a business reversal can be addressed by political action. 


I think we are probably getting a little­ bit of that, which is really just a way of China saying: ‘You guys be careful, because we can do you damage if we choose to do that.’ ” Mr Jennings said such action, also evident during last year’s introduction of foreign-interference laws, tended to stay “below the radar”, and never really developed into “full-on economic coercion”. Senator Birmingham said ­reports of the ban were unconfirmed and unsourced but he had asked Ms Adams to “urgently clarify­ their veracity”. “We continue to engage closely with industry on matters of market access,” he said. “I met with the Minerals Council of Australia this week to discuss market access ­issues and our related represent­ations to Chinese authorities. “China is a valued partner of Australia and we trust that our free-trade agreement commitments to each other will continue to be ­honoured.” DFAT officials played down any diplomatic concerns. 



China imported 271 million tonnes of coal from January to ­November last year — running at 9.3 percent above the same period in 2017 and outstripping the total of 270 million tonnes imported for the whole of 2017. Asked about the state of China-Australia relations, Mr Geng said China hoped Australia would work with it “on the basis of mutual­ respect for mutual gain to ­develop bilateral relations”. Asked about allegations that Chinese actors had been behind the cyber attacks on the Australian parliament, he repeated earlier statements made by the ministry this week, saying that people should be careful about making unsubstantiated accusations of cyber hacking. He called on sections of the media in Australia to “stop tar­n­ishing China’s reputation” by ­accusing it of cyber hacking in Australia. 

He said cyberspace was filled with “multiple actors whose ­behaviours are difficult to trace”. An importer said last night: “The coal import business is very vulnerable to China’s relations with other countries, but we can’t do anything about it.’’ A leading Chinese newspaper added to tensions after linking the coal issue to Australia’s ban on Huawei supplying equipment for the 5G network. “Can’t even sell coal to China?” the newspaper Cankaoxiaoxi wrote yesterday. “Australia can’t stand it any longer.” A populist paper published by Chinese news agency Xinhua,­Cankaoxiaoxi pointed out that Australia was one of the first countries to follow calls by the US to ban Huawei. 

It quoted Chinese academic Wang Shuo, the deputy ­director of the European Study Centre at the China ­Institute of Contemporary International Relations, an official think tank in Beijing, as saying that relations ­between countries needed to be based on mutual trust. He said that when countries from the Five Eyes intelligence-sharing group, including Aust­ralia, banned Huawei they should have been aware that it could have broader implications for the relationsh­ip. “Reality will help these countries to think over how to calculate political and economic loss and gain,” he said.


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