Mr Yamagami Shingo who is Japan’s Ambassador to Australia has cautioned Australia of
putting too many eggs in one basket with China. Yamagami Shingo has been the top diplomat
in Canberra of Tokyo for more than a year. Yamagami has further indicated large investments
by Japanese companies in Australian resources for instance critical minerals and gas.
Earlier it has been seen China has sanctioned Australian exporters by slamming 80%tariffs on
barley. This change has cautioned the leading think tank to tag Beijing’s tactical drive of
economic coercion against Canberra as a failure.
Roland Rajah who is the economist and director of the international economic program stated
‘ if China’s aim were to alter Australian policy, impose economic damage or to send a
cautioning signal to third countries about crossing Beijing, then according to me it’s safe to
state that China has basically failed in all three accounts’.1
With an 80% tariff, Australian growers of barley feared financial ruin as the tariff was imposed
just after the barley crop was sown. The prices collapsed in the pursuit of the impost. The
market recovered significantly with the effort of the Australian government by finding another
buyer in Saudi Arabia.
As stated by the Australian Bureau of Statistics, only 33,000 tonnes of Australian barley were
exported to China in 2021 October. In the same time period, Saudi Arabia became three largest
markets procuring 1.5 million tonnes.
Similarly, coal export was also affected by China’s informal restriction on commodity export.
Earlier normally one in five coal ships leaving Port of Newcastle were bound for China, now
the present figure is zero.
Mr Yamagami stipulated that earlier around 12 years back there has been a time when Japan
was subject to a similar drive-by to its North Asian neighbour. At that time China limited
exports of rare earth materials needed for multiple high-end manufacturing industries.
He further added this event was the impetus for Japan’s move from close to total reliance on
Chinese rare earth to other suppliers, including Australia. Henceforth Japan superseded in
narrowing its reliance on Chinese sources from 90 per cent to 60 per cent.
Mr Yamagami additionally said that this has been a great lesson learnt by my friend in Australia
after the tariff imposition by China on its commodities like wine, coal, barley, timber, lobster
and other products. Further added that Japan also will further cut its reliance on China and any
support from Australia will be more than welcome.
1https://www.abc.net.au/news/rural/2021-05-17/after-12-months-of-the-trade-war-is-the-china-dreamover/100127874
Critical minerals are in demand as they drive the modern economies and manage climate
change, but this could be cut off to Australia and its allies as strain with China increased further
according to the statement of experts.
As the relationship between Beijing and governments in Washington and Canberra is strained,
China is utilizing its monopoly of rare earth trade as a weapon against its competitors.
According to one of the research directors of Perth USAsia Centre Jeffrey Wilson ‘China’s
superiority gave it support over the ability of other countries to decrease emissions or even
furnish their defence forces.
China is presently is the dominating the world’s largest supplier of rare earth with 70 to 88 per
cent of global production. China’s monopoly over rare earth which is very much in demand for
current days technology has bestowed China with a really powerful economic weapon as stated
by Dr Wilson.
In fact, China has stopped the supply of rare earth to Japan in 2010. Lately, China has warned
that it might discontinue supply to the United States in the future. We can see China’s
relationship with a number of countries like Australia, Japan, the US and Europe. It has been
seen that China’s relationship with the mentioned countries has deteriorated in the past 12
months2
.
Further, there’s imminence that China might use its superiority to deploy the rare earth weapons
to penalize others who do diplomatic disagreements. Dr Wilson further added that
environmental standards were much lower in China compared to the developed countries,
permitting processing to take place at a very economical price compared to be achieved
elsewhere.
Amanda Lacaze, the chief executive of Australia’s rare earth provider Lynas, expressed that
they need government support to compete with China on costs. The matter of the contortion of
the market by having such a superior position from China for a period of time and capital
mobility in the market was not adequate to fix it.
To conclude China is still the largest market for agricultural goods for Australia, though the
supply chain has moved the traders want to survive and want to keep aside politics and focus
on what Australia is providing. The increased trade strain has halted the economic boom for
Australia but yes alternate market Saudi Arabia has helped a lot.
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