Why China’s coal ban on Australia matters
|The reports last week that China may have banned Coal imports from Australia is one headline to keep a note of. The reason for this is because around 30% of Australia’s GDP comes from its trade with China.
Australia’s biggest trading partner is China. Take a look at the list of Australia’s trading partners below and you can see that China sits very firmly at the top of the pile.
In terms of Coal exports, this makes up around 20% of all Australia’s exports. It’s a very big deal. In terms of GDP coal imports made up around 3.2% of Australia’s GDP.
Of these coal imports just under one-fifth of them go to China. So, this means that around 0.64% of Australia’s GDP is in the balance with this news.
If the reports are confirmed that China has instructed some domestic power plants and still mills to suspend buying Australian coal that is concerning. Australia and China have fallen out over the recent China vs West narrative which has been the offshoot of the US vs China trade war. The tensions however would dissipate with a Biden presidency, which the polls are projecting at the moment. So, expect any confirmation of these reports to weigh on the AUD. The reports overnight that Chinese Mills are being told to stop buying Australian cotton as potentially large tariffs loom is a concerning sign that relationships are not good between Australia and China.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.