How China’s Trade War With Australia Could Benefit Africa

China Australia Iron Ore
Credit: Small Caps

The outbreak of the global pandemic undoubtedly helped lessen the pre-pandemic trade war tension that ensued between the United States of America and China. However, Beijing and Australia are into a new trade dispute at a time when potential vaccines for the virus have been discovered. 

The photo scandal coupled with China’s escalating trade war with Australia has prompted One Nation’s Pauline Hanson to push for a boycott of Chinese products this Christmas – an idea that is already attracting a great deal of support.  Australia is one of China’s largest exporters of iron ore. 

Exports of goods and services to China are about 7% of Australia’s gross domestic product. Iron ore is the single-biggest category, at about 40% of the $153bn in goods and services Australia sends to China every year, according to the Department of Foreign Affairs and Trade figures. Trade restrictions over this commodity would invariably cause China to look elsewhere. But where exactly. Some analysts believe this could be a chance for Africa. 

According to an article in The Guardian, “part of the answer lies at a place called Simandou, deep in the interior of Guinea, in West Africa. It is home to the biggest undeveloped iron ore deposit in the world, which Chinese interests are keen to bring to production as soon as possible.

“The warning that China could turn to Africa to bypass Australian iron ore has in the past come from the country’s most hawkish English-language outlet, the Global Times, which has in the past few days been in the vanguard of the attack on Australia over allegations of wine dumping and references to the Brereton report on alleged war crimes by Australian special forces in Afghanistan,” The Guardian reported. 

The iron site at the West African country has a troubled history – it’s mired in corruption allegations dating back almost a decade – and will require billions of dollars to develop, a task that includes building a 700km train line to get the ore to port.

It is estimated that a total trade war with China would cost Australia 6 percent of GDP.  China consumes about 1bn tonnes of iron ore a year, a little over 60% of which comes from Australia. Brazil is the second-largest source, providing about 20%. 

What are some of the other effects of ‘big-power’ trade and bilateral struggles on Africa’s socio-economic development?

What do you think? Let us know in the comments.

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