Malaysia seeks to fill Australia's bauxite import ban. Malaysian media: unlikely to be a beneficiary of trade diversion between China and Australia

FX168 Financial News (Hong Kong) News China-Australia trade is in tension, and global experts predict that Australia’s bauxite and iron ore mining industry will likely be affected by the ban. Malaysia is regarded as an alternative country for bauxite and has a clear lead in this field. With the infrastructure connection of China’s Belt and Road Initiative, Malaysia is expected to become the main provider. However, as the country’s domestic bauxite mining activities are strictly regulated, the possibility of transformation is limited, and it is not expected to increase the energy exported to China.

           Australia is the second-largest bauxite and iron ore mining company and has a strong dependence on Chinese importers. Iron ore accounts for 40% of the US$153 billion in goods shipped to China each year. Malaysian media The Malaysia Reserve pointed out that many domestic experts in the country predict that Malaysia can fill this gap because in the past, major mining sites were set up near the Kuantan Port (Kuantan Port), giving Malaysia a clear priority in this field. However, Malaysia’s bauxite mining activities are subject to strict supervision, and its environmental impact is currently being reviewed, so the possibility of change is very small. However, it is worth noting that the mandatory ban on mining activities has changed from last year. It expires on March 31. If the operators can follow the standard operating procedures and complete the environmental impact assessment, they can resume their operations.

           Prof Dr Ahmed Razman Abdul Latiff, an associate professor at Putra Business School in Malaysia, said: “In Malaysia, bauxite mining activities are strictly regulated, even if China’s demand Due to environmental issues and the limited ability to maintain high production, I don’t expect bauxite production to expand immediately. Since January 2016, bauxite mining in Malaysia has been under tension for disaster in Kuantan Encourage ecological damage and water pollution to conduct environmental impact studies.”

          During 2015, Malaysia’s bauxite shipments to China reached 3.5 million tons per month. China occupied the leading position in global bauxite demand in 2019, as it accounted for more than 70% of the total maritime transport of more than 166 million tons of bauxite. With the infrastructure construction policy of China’s One Belt One Road Initiative, Malaysia is expected to become a source of services provided by the Maritime Silk Road and an alternative market for bauxite. Latif continued: “Malaysia has a slim chance of seeking trade diversion from other commodities, because most of the tariffs currently imposed are specifically aimed at the exports of the two countries.”

          He added: “From the list of commodities that China imposes high tariffs on Australia, most of these commodities are not Malaysia’s main export commodities, and therefore have little impact on Malaysia’s import and export activities. From another perspective, this is in line with China’s The U.S. tariff war has a different concept, because the U.S. imposes tariffs on goods from multiple countries, which will affect Malaysian exports.”

          Sunway University (Sunway University) Business School Professor of Economics Dr. Ye Jinlong said that both China and Australia should use the recently signed Regional Comprehensive Economic Partnership (RCEP) to resolve differences and resolve tensions. He said: “On the surface, China seems to benefit from RCEP because they continue to seek more regional ways to reduce tensions and political differences in order to establish a more harmonious and productive relationship with some countries. But I think RCEP also provides an opportunity for Australia to ease tensions with China, and the support provided by the Five Eyes Alliance, including the United States, will also play an important role.”

          Malaysian Prime Minister Muhyiddin Yassin called China a rational and gentle voice during the new crown pneumonia epidemic, referring to China’s appeal to countries not to take excessive measures to ease the emergency crisis to affect domestic economic activities. He reiterated that Malaysia is a major supporter of the multilateral trading system, called for resistance to trade protectionism and unilateralism, and maintained the mobility of cross-border goods and services.

         Muhyiddin delivered a keynote speech at the 2020 World China Economic Summit in Kuala Lumpur. He stated that Malaysia will become a pro-business, investment and trade country and will also be committed to developing international partnerships with countries around the world. He said: “As a supporter of the multilateral trading system, China has always maintained a rational and gentle voice during the period when the new crown crisis hits the economy, calling on all countries to take emergency measures to reduce pandemic-related risks. It will have a disproportionate impact on trade and investment. Governments should also resist excessive nationalist policies that may restrict international business relations. It is vital that governments continue to abide by the basic philosophy and rules governing international trade, so as to provide enterprises with certainty And predictability.”

        He added: “Then what follows is that we must resist trade protectionism and unilateralism, and allow cross-border goods and services to continue to flow unimpeded. The COVID-19 pandemic is unlikely to be related to innovation, digitalization and technology. Adopt to become an ally, because companies and consumers are forced to adapt to the restrictions of actions and operations. Companies that have resisted these pushes in the past, if they want to survive and remain relevant, no longer have the option of doing so. We must use new resilience And vitality to carry out economic activities, and if companies want to survive the crisis, they must also be prepared to adapt to the new economic shape.”

Source: FX168