Iron ore is an important industrial material that can be used to manufacture steel, which is greatly needed for national construction projects such as building houses and repairing railways. Therefore, iron ore is significant for any country.
In the case of China, although there is no shortage of iron ore, the quality is not up to par. Hence, for China to develop its industry, it has to rely on iron ore from other countries, such as Australia.
Australia's iron ore ranks first globally, making cooperation with them naturally the best option. However, to establish cooperation, a positive attitude is required. If the attitude is poor, the chances of cooperation will decrease, and the party with greater benefits will fall into imbalance.
For instance, as China's demand decreased, the prices of Australian iron ore and coal plummeted by 40%, causing panic in Australia. They immediately discussed this matter. So, why did China's demand decrease?
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Reasons for the decline in China's demand:
As mentioned earlier, iron ore is extremely important for China, and the quality of domestic ore is generally poor, with difficult extraction. This is why China usually imports iron ore from overseas.
However, in recent years, China has been increasing its efforts to mine iron ore, hoping to achieve self-sufficiency one day. There have been some achievements, so to some extent, China has reduced its dependence on iron ore.
Additionally, over the years, China's smelting technology has improved significantly. With technological advancements, a single unit of iron ore can now be used in more places, greatly increasing its usage rate and fully embodying the Chinese essence of "thrift."
China's desire for self-sufficiency stems from the good relationship between the United States and Australia. The United States has been considering sanctioning China, and Australia, wanting to win favor with the United States, naturally wants to show its support.
They capitalized on China's iron ore demand and significantly raised prices, aiming to make a fortune from China, which they视为 "this fat sheep."At the beginning, China had no room to resist and could only continue to purchase iron ore from Australia, which allowed Australia to gain a substantial amount of wealth. After acquiring this wealth, they became more arrogant, claiming they could directly control China. How could China allow themselves to be manipulated by them?
Therefore, China also had its own small calculations. Knowing that Australia was unreliable, it naturally had to seek other ways. So, China increased its investment in domestic mineral extraction, striving to break free from their constraints as soon as possible. After all, over the years, China has faced too many sanctions, but it has always managed to rise despite the challenges, such as with the satellite navigation system. If it were not for the sanctions imposed by the United States, China would not have developed its own Beidou satellite navigation system.
Additionally, China is in the process of transformation, and it is inevitable that the demand for iron ore imports will decrease during this transition. After all, the United States has now realized that China is developing rapidly in emerging technology fields and has begun to impose sanctions on our country's new energy electric vehicles, chips, and other areas. So, China's actions can also be seen as a counter-sanction against Australia.
It is worth mentioning that the current development trend of China's automotive industry is rapid, with many cars being exported to Australia. According to the current development trend, China will have more bargaining chips when negotiating with Australia in the future. Of course, for now, Australia still needs to first address issues related to Australian iron ore and coal exports.
Australian iron ore and coal exports have suffered a heavy blow. Since the beginning of this year, the plan to "reduce dependence on iron ore imports" has had a significant effect. With the implementation of China's plan, the price of Australian iron ore has plummeted, resulting in substantial losses. Especially in early September, Chalmers stated that Australia is expected to lose as much as 4.5 billion due to this, which is not a small amount for Australia, which already has economic issues.But at this point, they realized where the problem lay, and it was obviously a bit late, as China had already started to take action. Of course, they still hoped for some easing on this matter, so Chalmers stated that he would visit China to consult with them on this issue.
He hopes that this visit to China will go smoothly, as China's reduction in iron ore imports from Australia would be too much of a loss for Australia, something they cannot bear.
At the same time, they also indicated that when the prices of these commodities drop so sharply, it represents the global economy becoming unstable, and they need to take precautions early on.
Of course, he was very tactful when speaking to journalists; he did not mention anything specific about China but considered it inevitable, as the economies of several major countries are facing issues today.
Ultimately, it is the high prices and raised interest rates that have led to this situation. Australia's economy, like that of the United States, is suffering from such crises, and of course, the most direct problem is the sharp decline in commodity prices.
In addition, there are also many people who do not agree with Chalmers' views, believing that all the fault lies with him. Since he took office, he has not addressed the inflation issue, which is why this situation has occurred, and their approach to solving problems with money will not last. As for how this matter will be resolved in the future, it will depend on the discussions between Australia and China.