The Australia–China iron ore war

Chapter 7 examines a perplexing bilateral dispute over iron ore between China and Australia. These economies are ‘natural complements’ in the iron ore sector, with the Australian economy structurally dependent on iron ore exports and Chinese heavy industry equally reliant on low-cost Australian supplies. But despite trade growing rapidly from 2005, the China–Australia resource relationship has been marred by continuous controversy. A series of inter-firm, inter-state and state-firm disputes emerged over alleged Australian resource nationalism targeted against China, the market power of Anglo-Australian iron ore mining firms, and attempts by the Chinese government to manipulate regional markets using cartels and ‘strategic’ investments. These tensions spilled over in 2009 during the ‘Stern Hu’ espionage scandal, which saw both inter-firm and inter-governmental relations between Chinese and Australian actors almost irrevocably break down. The China–Australia iron ore war demonstrates how otherwise mutually beneficial relations between producers and consumers can be derailed by resource securitisation and the conflict and mistrust it engenders.