Smoot Hawley Act

[Leftofcentresalterego]

Not sure how seriously a somewhat more protectionist China would affect us. Our exports to them are pretty much limited to high quality thermal coal, metalurgical coal, iron ore and aluminium ore - things that they cannot produce for themselves, at least not in anywhere near the quantity that even their domestic stimulus program requires.

I wouldn't be at all surprised if the majority of the world's country's have done the same on some scale. In a globalised economy, the "inefficient capital" will be driven out when harsh times strike. They may not be inefficent per se but simply unable to compete with countries that use near slave labour and manipulate their currency. Observe the exodus of Australian TCF manufacturers to China and south east Asia. They are struggling to compete with both cheap imports and tough times and also know that the TCF tarrif is slated for abolition. In such a situation, it would be pointless trying to remain in business in Australia.

The advantage of free trade is that we get cheap goods (initially). The disadvantage is that in order to get them we have to export jobs and industries, and the goods are not gauranteed to remain so cheap once local competition no longer exists ( case in point: the quality workboots I buy are no longer made in Australia, it was much cheaper to do it in Indonesia. But did the price of the boots come down? No! Not a cent! Some is making a killing while Indonesians labour in sweatshops and Australians TCF workers line up at Centrelink.)

[Jovial Monk]

Services, tho minor, do line up with mineral & farm products as exports and these could be hurt by Chinese protectionism.

[Leftofcentresalterego]

I guess it all comes down to what we consider too valuable to lose.

Cement Australia's Fishermans landing plant at Gladstone is the largest cement plant in Australia, supplying close to half of Australia's cement. Most of the limestone to make the clinker from which cement powder is produced is quarried at east end mine, 25km from Gladstone. A blue has erupted after the company made a section of the plants employees take annual and unpaid leave until Christmass as it scales back operations, citing poor economic conditions. However, it is now importing at least 40 000 tonnes of clinker......from China.

When it becomes cheaper to import rocks from halfway round the world than it is to transport them all of 25km in our own back yard, then I begin to call the system into question. How can such trade possibly benefit us?

[Jovial Monk]

Indeed.

Used to be, that clinker would be carried as ballast. Doubt that would add up to 40,000 tonnes tho.