Still more people freaking out about China. When will they get it?
So it seems that China is gunning for Australia’s cotton industry now.
Australia’s cotton industry is bracing for what could be a devastating blow as it becomes the latest casualty in the escalating trade tensions with China.
Mills in China are being told to stop buying Australian cotton as speculation grows that a hefty tariff is about to be slapped on the trade.
Government sources have told the ABC the cotton industry could face tariffs as high as 40 per cent, a sanction that could make the trade with China unviable.
Under China’s current trade rules the Chinese Government determines how much cotton each mill can import through a quota system.
But the ABC understands spinning mills have been warned not to use Australian product, or risk their quotas being slashed.
Without the government endorsement, these mills could be forced to pay 40 per cent more to buy Australian cotton.
The Australian industry has become increasingly nervous about the $800 million market, which typically accounts for 65 per cent of the cotton grown nationwide.
“Devastating blow.” Get over it. Cotton should just do what coal’s doing, in light of similar attacks.
That is, shrugging it off and saying “whatever.”
BHP’s Chinese customers have asked the miner for relief from coal purchase contracts in the wake of Beijing’s move to crack down on foreign coal imports.
The requests for deferral come amid uncertainty over whether China is seeking to limit purchases of foreign coal of all origins, or whether Australian miners are being specifically targeted under an extension of geopolitical trade tensions.
BHP chairman Ken MacKenzie said he would be concerned if Australian coal was being discriminated against.
But Mr MacKenzie said he was generally “not overly concerned” about the impact that trade tensions would have on demand for BHP's products, but he was concerned about the impact on ”the economic cycle”.
”Our concern around some of these geopolitical tensions and trade wars that are going on is the impact it could have on global growth, and in a post-Covid world that probably has even more concern,” he said.
Are you catching that? BHP doesn’t care if China doesn’t buy its coal. All it cares about if total global demand for coal goes down.
Senator Matt Canavan gets it:
National Party Senator Matt Canavan said Australian exported about 20 per cent of its coal to China.
“It’s a sizeable market but it’s not our biggest market,” he told Sky News, adding the largest market for thermal coal was Japan.
“We only actually produce about 5 per cent of the world’s coal, so if China decides to buy its coal from different countries, well, those other countries will be exporting less coal and we’ll fill a market gap in those places.
If China buys Brazilian coal, we’ll just sell to whoever Brazil was selling to.
That’s the thing about commodities. It doesn’t really matter where they end up. And that’s why BHP is so relaxed.
The real madness is here is that we allowed a single market to buy up 65% of our cotton output.
That’s nuts. That’s a strategic vulnerability.
But thankfully, we’re on the slow (and noisy) road back.
So chill, everyone.