China Halts Copper Concentrate Trade with Australia

According to economic data released on January 20, 2021, the People's Republic of China (PRC) halted all imports of copper concentrate from the Commonwealth of Australia (AU) in December of 2020. It appears as though this decision is simply another way for Beijing to punish Canberra for its recent adoption of a hard-line foreign policy stance against China.



Background

Over nine months ago, The Intelligence Ledger published a report on the People's Republic of China's strategic objectives. In it, special attention was given to the potential use of economic coercion by the government in Beijing against Australia if the two nations interests were to clash. On May 11, 2020, that prediction became a reality. Authorities operating on behalf of the PRC announced that it would take steps to suspend imports of beef from four major Australian producers. Over the following months, Beijing also took actions against Australia's travel, wine, and barley industries, severely hurting the economy of the Land Down Under.


Assessment

The decision by Beijing to halt imports of copper concentrate is a significant action, yet one the PRC believes will give Canberra room to maneuver. Up until November of 2020, Australia had been a major supplier of the product, as the PRC has a major need for the first commercial result of the copper production line. Beijing undoubtedly believes that Australia must aqueous to its demands, or face economic ruin. This, however, may be a major miscalculation. There is growing bipartisan consensus in Australia that a tougher line must be taken on China in order to avoid the type of bullying occurring today. Furthermore, the ban on copper concentrate may not be having the impact Beijing imagined. According to Financial Review, Chinese miners have been able to find new markets to off-set the loss of China's vast market.


For the Australian government, there is little to do but develop better trading, intelligence, and military relationships with the United States, United Kingdom, Canada, and Europe. The Commonwealth is tightly tied to China for a positive economic outcome. As the PRC's economic growth rocked in the late 1970s, Australia was well positioned to both meet demand and serve as a market for Chinese goods. Today, the PRC is Australia's largest trading partner in both exports and imports. According to the Australian Parliamentary Library Briefing Book, nearly 25% of Australia's manufactured imports come from China, while 13% of its exports are thermal coal to China. Its trade relationship with the PRC dwarfs any other partnership with any other nation.


Winston Churchill once noted, "you cannot reason with a tiger when your head is in its mouth!" It would be wise for the leadership in Canberra to realize that unless they develop an economic independence from the PRC, they will continue to risk becoming politically subservient to the rising Asian power.

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The views expressed by this service are solely its own and do not reflect the official policy or position of the United States Army, Department of the Army, Department of Defense, or United States government.

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