March 9th 2019


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Articles from this issue:

COVER STORY Commissioner Hayne offers banking stimulus

EDITORIAL Beijing's warning shot hits our soft economic underbelly

CANBERRA OBSERVED Coal ban just one front in Beijing's war on everyone

RURAL AFFAIRS Activist groups harass farmers while claiming tax-exempt status

BANKING ROYAL COMMISSION Dealing with disaster back into the too-hard basket

FOREIGN AFFAIRS Why Hungary and Poland rile the EU

RELIGION AND POLITICS Christians resolve to raise their voices in the public square

GENDER POLITICS Another freedom bites the dust under Daniel Andrews

FAMILY AND SOCIETY The end of 'Liberalism'

CHINA Thank you for your service, soft power; sharp power will take it from here

SCIENCE AND PHILOSOPHY Fermi's Paradox: Is Big Alien watching you?

MUSIC Perpetual vibe: From medium to media

CINEMA At Eternity's Gate: Impressions of Vincent

BOOK REVIEW Balanced account after the hysteria

BOOK REVIEW Golden Age for workers and its end

LETTERS

POETRY

SPECIAL EDITORIAL Has Cardinal George Pell been wrongly convicted?

THE CARDINAL PELL CASE: Triumphalism over Pell verdict shows civilisation just a veneer

THE CARDINAL PELL FILE

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EDITORIAL
Beijing's warning shot hits our soft economic underbelly


by Patrick J. Byrne

News Weekly, March 9, 2019

 

  • Restrictions apply to Australian coal but not to coal from competitors like Russia or Indonesia
  • Australia has resisted Beijing on several strategic and security fronts
  • A national development bank with a focus on decentralisation is essential to Australia’s sovereignty

Beijing’s sudden restrictions on our coal exports are a warning about Australia’s overreliance on exports to China and overreliance on imported Chinese manufactured goods due to the loss of Australia’s industries.

Last week Beijing announced restrictions on the offload of Australian coal in five ports at and near Dalian in northeast China. A Chinese Ministry of Foreign Affairs official claimed it was not a ban on clearing in Dalian ports, but was part of Chinese Customs monitoring coal into the country for environmental purposes.

While the official said there was no specific ban on Australian coal, sources at a major Chinese steel consultancy told The Weekend Australian (February 24-25) that the restrictions did relate to Australian coal but not to competitors like Russia and Indonesia.

Similar crackdowns in the past have reflected temporary adjustments to supply rather than a targeted coal supplier. The restrictions affect about 15 per cent of Australia’s coal export to China.

China’s coal-import restrictions come at a time when relations between Canberra and Beijing have been strained. Australia has taken a strong stand against the Chinese military bases being built on artificial islands in the South China Sea. Also Canberra has resisted Beijing’s push into Australia’s backyard in the Pacific. Moreover, cyber attacks on Australian institutions appear to have come from China and Canberra has banned Chinese telco Huawei from participating in Australia’s 5G network.

Regardless of the exact reason for the restrictions, the fact is that Australia is far more dependent on China than China is on Australia. Further, Beijing is not beyond using trade restrictions to discipline Canberra.

China is Australia’s biggest export destination by far. It absorbs 31 per cent of our exports (including 89 million tonnes of coal worth about $15 billion a year), followed by Japan at 13 per cent and the United States at 6 per cent.

China is also Australia’s biggest source of imports (18 per cent), followed by the U.S. (12 per cent) and South Korea (7.3 per cent).

Here is the rub. Australia has increasingly come to rely on exports of coal, gas, minerals and gems (worth 64 per cent of exports) to pay for manufactured goods as domestic industries have closed or shifted offshore. Australia’s manufacturing industry has shrivelled from 14 per cent of the economy in 1995 to below 6 per cent today.

Eggs in too few baskets

Whereas China scours the world to ensure diverse sources of raw materials, Australia has become heavily dependent on its exports to China. Indeed, Australia’s two-way trade with China now dwarfs trade with Japan, the U.S., Korea and other nations.

This is at the same time as the global anti-coal campaign is heavily focused on preventing the Adani mine development in central Queensland, which would diversify coal exports to India. The same anti-coal environmental groups have stopped the development of low-cost domestic power plants, forcing up the cost and reducing the reliability of power; which reduces the nation’s international competitiveness.

As Australian reliance of trade with China has grown, Beijing has been left with a strong economic hand to exercise in disputes over Beijing’s increasingly aggressive foreign policy.

As China gears its economic policy to its strategic objectives, Australia needs to re-gear economic policies to ensure the nation’s sovereignty. That means building infrastructure without reliance on investment from Beijing, and building industries to reduce reliance on imports.

While private enterprise builds most industries, governments build the infrastructure and manage the banking system and trade and other policies that are the foundation of national industries.

So, here is a basic recipe.

  • The Federal Government should give the lead and “buy Australian” over imported products, where possible. In a small domestic market like Australia’s, this means there is a base market for Australian manufacturing and service industries.
  • New coal-fired power stations are needed to ensure low-cost energy to industry.
  • A national gas, oil and energy security policy should encourage oil exploration and guarantee gas reserves at a reasonable price for the domestic market.
  • To build Australia’s infrastructure (including new reservoirs for farming, industry and cities), a national development bank with a focus on decentralisation policies (which has the end effect of putting jobs into regions where families can buy a home), facilities for rural reconstruction (to recapitalise Australia’s highly indebted farmers), and facilities for recapitalising industries.

Essential underpinning

Getting this form of banking behind national development is essential for making other policies work. If the Federal Government can back China’s Asian Infrastructure Investment Fund and create a Pacific Development Bank to assist our near neighbours, why can’t Australia have its own development bank?

If Australia is to maintain its own political sovereignty, and the independence of our Pacific neighbours, from the encroaching power of China, Australia must first ensure its economy cannot be held to ransom by Beijing.

Patrick J. Byrne is national president of the National Civic Council.




























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