China imports of coal go into steep decline but there’s a silver lining for Australia – by Angus Grigg (Australian Financial Review – July 13, 2015)

China is demanding less coal and more wheat.

That’s the key message from first-half trade data released on Monday by the Customs Bureau, which showed China’s overall imports remained weak while exports were only marginally better.

In US dollar terms the value of trade in the world’s second biggest economy fell 6.9 per cent over the first half of the year as wheat imports surged and coal declined.

For Australia, these wildly divergent statistics are hard to ignore. Over the first six months of the year, the volume of China’s coal imports fell 37.5 per cent compared to the same period in 2014.

The volume of wheat imports was up 66.5 per cent over the same period. For coal, the decline is a combination of protectionism and falling domestic demand.

The Chinese government has made it very clear over the past year that domestic coal producers will be given priority over their foreign rivals.

This appears to be compensation for the tougher environmental laws imposed on domestic steel mills and power producers, which have resulted in lower demand for coal.

The preferential policy was confirmed in October 2014 when Beijing slapped a tariff of between 3 per cent and 6 per cent on Australian coal imports without notice.

Since then, Beijing has also been levying a series of so called “behind the border” tariffs on Australian coal.

According to the Minerals Council of Australia, this has resulted in Australian coal shipments being subjected to far tougher “quality tests” than domestic Chinese producers.

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