Tarric Brooker: China’s Aussie coal ban backfire shows it doesn’t know what it’s doing…


China’s Aussie coal ban backfire shows it doesn’t know what it’s doing

Tarric Brooker

JANUARY 10, 20211:26PM

It made a very bold stand against Australia, but the dire consequences for China proves it isn’t as in control as it would like you to think.Tarric Brooker

Towards the end of last year, as the year of challenges that was 2020 finally began to draw to a close, multiple provinces across China were hit with unexpected blackouts, amid an unseasonably cold winter.

Rather than being caused by power infrastructure failure or a storm, this blackout was arguably mostly avoidable.

Which begs the question, how did China, a nation that prides itself on fastidious planning and a forward-looking viewpoint end up with millions of its citizens sitting around in the dark during the cold of winter, in some cases with no heat?

Among other things, a ban on imports of Australian thermal coal.

On paper, eliminating imports of Australian thermal coal should have been a perfectly achievable task for Beijing and accomplished with relatively little difficulty. After all as of March 2019, imports of Australian thermal coal made up just 1.6 per cent of total coal consumption for power generation.

But somewhere in their planning for their ongoing coal consumption, some Chinese officials seemingly made a mistake, resulting in coal shortages across multiple provinces and rising coal prices across the country.

While it may seem like this power shortage almost came out of nowhere and that there were few warning signs, it could be argued that considering the failure of strategic planning some of the key root causes actually began months ago.

In late September, shipping news website Splash reported there were more than 20 large bulk carriers with cargo holds filled with Australian coal, waiting to be unloaded at Tangshan’s Jingtang Port in northeast China.

By the time the coal ban was formalised in mid-December, the number of ships waiting at Chinese ports with cargo of Australian thermal coal had risen significantly. According to a report from Splash, as of the December 15 there were 74 enormous bulk carriers waiting to unload their cargo.

To put that number into perspective, that is enough coal to create 21 billion kW/h of electricity. Or roughly enough to supply literally every home of China’s 1.44 billion people with electricity for over a week.

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Meanwhile in some provinces such as Shanxi in northern China, the cost of coal rose by as much 50 per cent as demand skyrocketed.

In fairness to Chinese officials, the import ban on Australian thermal coal is not the sole driving factor behind the coal shortage and blackouts.

The unusually cold winter has seen demand for coal rise significantly, with electricity consumption rising by 11 per cent year on year during November. At least 20 Chinese provinces reported that their power grids experienced a double digit rise in consumption.

Meanwhile China’s domestic coal producers, who supply around 93 per cent of China’s coal requirements, have been hit by production halts, following a number of mining accidents.

A push by the Chinese government to fulfil the country’s emission reduction commitments and provincial governments efforts to reduce pollution, were also put forward as contributing factors in the unexpected blackouts.

While it’s likely that all the aforementioned factors and others played a role in the blackouts and the coal shortages across multiple provinces of China, one can’t help but be struck by the sheer volume of Australian coal and electricity generating potential sitting at sea just off the coast from multiple ports.

Beijing’s ban on Australian thermal coal should have been yet another easy blow to the Aussie economy that China should have easily been able to shrug off. Yet despite its reputation for meticulous planning, the world saw headlines of unexpected blackouts in China, alongside those covering Beijing’s ban on Australian thermal coal.

Though the chief catalyst for the unexpected blackouts remains a matter of debate, a combination of Beijing’s aggressive wolf warrior diplomacy and a failure of strategic planning has left China looking foolish, if only for a moment.

Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator



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