This week we’ve seen a number of interesting plays from China - many of which are signaling a direct policy shift by the Central Committee of the Chinese Communist Party (CCP) towards surprisingly moderate position.
How these will play out over time (and the CCP’s underlying strategy) as always, is up for discussion and speculation.
BAM! Out of nowhere China announces a new 3%-6% import tariff on thermal coal… effective almost immediately.
This fits in with the stated aim of China to transition towards a more sustainable method of energy productions. Dirty old coal appears to be out, while the continuing development of the solar industry continues unabated.
However, is this all about climate, or is it simply protection of China’s own coal industry as the price flounders around US$80 per tonne? Despite being one of our biggest export targets, China still out-produces Australia at a rate of 10:1, so as demand continues to drop it is definitely in China’s interest to maintain a strong price to support internal productions.
Don’t forget, though, that China is still in negotiations with Australia regarding a Free Trade Agreement. It must be nice to be such a large government, yet nimble enough to insert another bargaining chip at a moment’s notice. Perhaps Australia shouldn’t have shown its hand after the last election, declaring it would be done by Christmas this year.
China isn’t known for robust and transparent monitoring of the finances of its public officials. The upper echelons of the CCP have grown rich through their engagement with industry from within, or their appointment to high part positions as a result of their commercial success.
Interestingly then, under the leadership of Premier Li Keqiang and President Xi Jinping there have been concerted efforts not only to clean up the operations of the CCP, but to track down those who have previously profited from under-the-table deals and stupendously large ‘incentive payments’