Nobel-prize-winning economist Gary Becker argued that those who discriminate end up paying a price.
If you employ only males, you miss out on highly skilled women.
Your egalitarian competitors will then gain an advantage from a higher-skilled workforce.
We are seeing another example of this insight in China’s recent discrimination against Australian beef, barley, wine and coal.
Over the weekend, China has made official its discrimination against Australian coal.
Chinese state media report that the powerful National Development Reform Commission has given approval for Chinese companies to import coal, except from Australia.
The result has been Chinese power stations and steel mills paying up to 50 per cent higher for a lower quality product.
The complaints from China’s steel mills about iron ore pricing demonstrates the pressure that they are under.
China’s illegal trade actions hurt our businesses but, in the long run, they will cost China more than they cost us. We have nothing to fear.
Our high-quality products will find customers, while Chinese businesses will continue to lose buyers if they continue to deny themselves the use of Australian goods.
Australia exported 94 million tonnes of coal to China last year, making up 24 per cent of our coal exports. China is an important market, but let us put things in context.
More than 1.2 billion tonnes of coal are traded across seas every year. So our coal exports to China are just 7 per cent of the available market.
Given the high quality of our coal, we will find other customers.
That has already happened. Even before the recent official announcements, our coal is being redirected to new customers like those in India.
Australia exported double the amount of coal to India in November than we did in January this year. India is the fastest-growing coal market in the world.
Australia normally provides less than 5 per cent of India’s thermal coal, so there is a lot of room for us to grow.
That makes the timing of the Adani coal mine impeccable. Pending the wet season, Adani is on track to export coal to India within 12 months. Imagine if the Stop Adani crew had got their way now that China has banned our coal?
Adani’s new rail line is being built with steel made at Liberty Steel in South Australia in a further boost to jobs.
And the world is with Australia in turning away from Chinese products.
The Indian city of Chennai this week announced the construction of 18 new factories, which will replace goods they normally import from China.
Despite China’s actions, the coal price has shot up in recent weeks as the world reopens after the coronavirus.
While Australia is taking the brunt of Chinese threats at this stage, the whole world is waking up to the problem of doing business with an untrustworthy Chinese Communist Party.
China’s actions just once again demonstrate the folly of discrimination, which like a boomerang, tends to rebound on those that practise it.
