Killing monkey to scare chickens: how China – Australia spat plays out

The on-going trade spat between Australia and China has intensified so much that China opted for “killing the monkey to scare the chicken” business manoeuvre. There is a twin meaning associated with this theorem: one is to punish the culprit, the other is to frighten the rest who are directly or indirectly connected. China has mastered the art of this business manoeuvre in such finesse to bring out major geoeconomics upheaval in the region. 

Monkeys do not necessarily go after chickens. Though monkeys are omnivores they generally go after food of plant origin. Occasionally they peep at easy prey of birds etc. Therefore the idea of killing the monkey to scare the chickens is to make an example out of someone so as to threaten the weaklings.

As a member of the Quad, Australia is punching above her weight by engaging with Chinese dragon at the behest of America. Mr. Scott Morrison, Australian P.M is the latest addition to the list of nemesis for China who has taken up the cudgels of defending global rules based order, trade liberalism and human right issues in Chinese territory, against the wrongdoers mainly the Chinese CPP. Evidently, US purposely subcontracted her own trade war upon Australia for a breathing pause. Climbing on escalation ladder Kangaroo now finds itself caught in the cleft wood.

Trade stats do not lie the exposed front of Oz. Close upon 70 % of her iron ore exports sail into Chinese ports. Correspondingly China imports 60% of her iron ore requirements from Oz. Of late, the price of iron ore has ratcheted up to US$ 240 per tonne. Iron ore is an important revenue earner and every US$ 10 increase in price works out to additional income of US$ 10 billion.  From China alone, Iron ore exports garner more than US$ 100 for Oz.

Announcing the new business manoeuvre of curtailing Iron ore imports Chinese authorities are hell bent in cutting 50% of total imports from Australia and broaden her profile of willing sellers. Brazil being the second largest supplier is in for a boon time. This is supplemented with China increasing her own iron ore mining and instituting the recycling process of used iron or scrap into ingots.

Any attempt to cut down Oz to size has rippling effects upon both in the case of Australia and her neighbours. For Australia cash-flow tap is being wound down. For her neighbours in Western Pacific and South & North East Asia it is too frightening as their geoeconomics is tied up with China in the groin. Shivering like chicken even countries like South Korea and Japan are counselling the wild Kangaroo to chill down.

 

Cheers! 

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist