CHINA STILL NEEDS AUSTRALIA TO BOOST ITS ECONOMIC RECOVERY
China and Australia spent much of last year in a tense standoff on trade. But as the recovery of the world's second largest economy gathers pace, China needs more iron ore and Australia is still its main supplier, Laura He reported for CNN Business late on January 19, 2021.
Beijing on Monday reported that China's GDP grew 2.3% last year, averting the recession that gripped much of the world as the coronavirus pandemic spread. GDP in the fourth quarter grew by 6.5%, compared with a year earlier.
Of big help was the Chinese government's decision to invest heavily in infrastructure projects. Industrial output rose 7.3% last month compared to a year earlier. And crude steel production hit a record 1.05 billion metric tons (MT) for the year, a 5% increase from 2019.
The country can't sustain that kind of output without iron ore, which it needs to make the steel for roads, bridges and buildings.
China imported 17% more iron ore last year than it did in 2019. Australia is a big winner of that growing demand, being responsible for some 60% of the iron ore that China imports.
"China's impressive industrial recovery has stoked demand for steel production, and Australia is a major supplier of steel making inputs to China," said Sean Langcake, senior economist at Oxford Economics.
Australia 'deeply troubled' by reports of Chinese restrictions on its coal. China's reliance on raw materials from Australia stands in stark contrast to the attempts Beijing has made to put pressure on Canberra.
After the Australian government called for an international inquiry into the origins of the pandemic last year, China slapped heavy tariffs or bans on imports of wine, beef, barley and apparently coal.
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