Do the Chinese have to worry?

We support the Australian mining industry in its campaign to abolish the Resource Rent Tax.

See this election statement from Fortescue Metals. Fortescue Metals is of course leading the campaign against Labor and its Resource Rent Tax.

I personally think the issue is even more serious that Fortescue realises. The Chinese need commodities and Australia government, which professes to be a 'free trader' is kind of using tax to extort wealth from not just Australians, but really from the Chinese as well. Its not just Australia either. India has raises its tax on iron ore exports, which are destined for China. They are now consumed domestically, which means Australia has year had to buy even more iron ore from Australia and Brazil.

Such 'hard ball' tactics believe is destined to lead to an escalation in trade conflicts. This is a big issue for China. It reminds me of the trade embargoes placed on Japan which resulted in Japan joining the Germans in World War II. Ok, I don't expect a war, but one might question yet again the fairness of such 'non-market' extortion.

Notwithstanding the fact that China has its ideological conflicts, don't we want to lead them to market. Here, Labor seems to be telling them 'Screw you, we have the power now'. Its not market power, its market extortion. In this case some investors are able to pass on the costs.

--------------------------------------------

Andrew Sheldon www.sheldonthinks.com