WA Today reported that Chinese hunger for Australian coal is likely to wane as it moves to a more energy efficient economy.

Professor Ross Garnaut, climate change and China expert, who led the government's review on climate change and served as an ambassador to China in the 1980s, told an economics conference in Melbourne that “China's 'quite radical' efforts to tackle climate change and an ageing workforce had shown early signs of success leading to a potentially dramatic impact on Australia's second most important export earner, coal.”

Professor Garnaut said “'Coal use in China has hardly increased at all despite the growth in the economy. ''That's contributing to a surplus of coal in China and internationally and putting big downward pressure on prices with implications for Australia.'”

Professor Garnaut was upbeat on the prospect of China successfully rebalancing its economy and said there was no reason why it would not continue to grow very rapidly, despite structural changes in the economy, including a shrinking workforce, thanks to the low fertility rate a byproduct of the one child policy.

Professor Garnaut said “'My guess is that Chinese economic growth will settle in the 7% to 8% range, but everyone has to recognize that there is a bit of a risk of overshooting on the downside. With China having undergone decades of fast paced urbanisation, the Chinese economy would no longer benefit as much from the 'easy boost' of people moving from rural areas to the cities. But rising wages would force labour to be used much more efficiently.”

His comments came as a report revealed that not a single Chinese steel mill surveyed by Platts had a positive outlook for domestic demand and exports, potentially dampening demand for the fuel further.

Source - WA Today

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