Her Excellency Ms Jan Adams AO PSM, Australian Ambassador to the People’s Republic of China
Speech to the 16th China International Steel & Raw Materials Conference, Dalian
22 September 2016
Executive Vice Chairman Gu Jianguo of the China Iron and Steel Association,
Mr. Wang Fenghai, Vice President, Dalian Commodity Exchange,
Mr. Wang Liqun, Vice Chairman, China Iron and Steel Association
Distinguished guests, ladies and gentlemen.
I am pleased to be able to speak to you today, my first time addressing this significant conference. I wish to thank the China Iron and Steel Association for the invitation.
The Australia-China bilateral relationship is strong, complementary and growing. Our economic and political ties are vast and robust. In recent years we have endured challenges together, including weak global growth, and the threat of climate change. We will continue to work together to address these.
Since I became Ambassador in February this year, we have had a number of important leaders’ meetings. These include Prime Minister Malcolm Turnbull’s visit to Shanghai and Beijing in April, coinciding with the second Australia Week in China trade and investment showcase.
Most recently, Australia’s Prime Minister again met President Xi in the margins of the very successful G20 Summit in Hangzhou, and Premier Li during the subsequent East Asia Summit meetings in Laos.
The China-Australia Free Trade Agreement continues to be implemented successfully by both sides since its entry into force at the end of last year.
CHAFTA is opening up new market opportunities for businesses on both sides, particularly with a view to meeting demand in China for new financial services, agricultural products and other consumer items needed by the growing middle class.
But the bedrock of the trade and investment relationship remains mineral commodities, especially those supplying the steel sector. And this is another area where the complementary nature of our relationship is pronounced.
Australia’s Department of Industry forecasts our iron ore exports will reach 874 million tonnes next year, up from 767 million tonnes in 2015.
Despite this growth, we all noted with interest that China’s steel production and consumption both fell in 2015, the first such falls in over 30 years and 14 years respectively.
With supply and demand levels in 2016 expected to be similar to those of last year, there is ongoing debate among commentators and market participants about whether or not we will see further growth in the years to come.
But regardless of this, it is clear that as China’s economic growth slows, there will be bumps on the way. China’s leaders face complex economic reforms that will take time to implement.
The shift from investment-led to consumption-driven growth will be gradual, and will require careful management by business, both private and public, as well by as policy makers.
G20 leaders this year recognised overcapacity in the steel sector as a global concern requiring a global response. China has committed to wide-ranging reforms in its steel sector, and these will be much discussed at this week’s conference.
Additional reductions in China’s coal capacity are being pursued across a range of provinces. These are significant contributions. We should acknowledge the complexities of implementation, and be patient as progress is made.
As Australia’s Prime Minister has made clear on many occasions, we must also avoid protectionism that harms producers and consumers, and increases costs for all.
Instead, we should promote free trade, transparency and innovation in order to enable goods and services to reach consumers in the most efficient and affordable manner possible.
This is true for steel, and it is true for the raw materials that go into steel. We continue to make our concerns known in China over the coal quality testing regime being applied to imported coal.
As we have said before, Australia accepts and supports China’s new coal standards, but we are still waiting to see these applied equally to all coal in China.
We also call for a return to testing practices that are in line with international standards that will give improved confidence to exporters and their customers in China.
In addition to addressing the issue of excess capacity, China’s leaders are pursuing initiatives designed to stimulate economic activity and support productive investments.
I mention the One Belt One Road initiative as an important connectivity agenda between China, its neighbours and the broader region. At the same time, the Asian Infrastructure Investment Bank will support projects in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation.
These initiatives will contribute to demand for iron and steel in the coming decades. And we believe Australia is very well positioned to make a significant contribution to this effort.
Australian iron ore and coking coal producers continue to be among the world’s lowest cost and most efficient producers. They are among the most internationally competitive and, I can assure you, they are also competing extremely hard at home. There are now a range of players in our market, not just one or two large ones.
While we have seen more buoyant prices in recent months, our mining sector remains under pressure with its counterparts around the world. All of our producers are continually working to improve supply chains and lower costs.
At the G20 summit, leaders welcomed the announcement that China and the US had both ratified the Paris climate change agreement. Australia too will continue to play its part, and is in the process of ratification. We firmly believe we can have economic growth and emissions reduction – hand in hand.
In this context, the high quality and low impurities of Australian iron ore and metallurgical coal will continue to provide competitive advantages and improved environmental performance for steel makers.
Low-emissions technologies, in particular in heavy industries, also have an increasingly important role to play. As governments we strongly encourage private sector engagement and collaboration with universities and other research organisations to develop and deploy these technologies.
We are now witnessing a range of initiatives by iron ore and steel producers alike to reduce their emissions and other aspects of their environmental footprint. We welcome these moves, and are confident that Australia and China can continue to work together on these.
Through our ongoing trade and investment ties, Australia will continue to be a strong contributor to China’s economic development. Even with a slower growth path ahead, we have every confidence in ongoing strong demand for high quality raw materials.
I said earlier that we will ride out whatever challenges arise together, and I leave you with the Chinese phrase referring to riding the same boat in the wind and rain: fēng yǔ tóng zhōu!
Both sides will continue to benefit from this stable, growing and complementary relationship.
Thank you.