If you want Australian made solar panels, I recommend Tindo Solar. They have a track record of quality panel production nearly a decade long. But you’ll pay a premium for Australian made.
If you’re happy to pay extra, this isn’t a problem. But if you choose cheaper, imported panels are you harming our economy by not buying an Australian-made product?
To be clear, if you buy foreign panels, you won’t be supporting Australian solar panel production. But you will be supporting the Australian economy just as much as spending the money on Australian-made goods.
Foreigners refuse to give us solar panels for free. We can only get these cheeky foreigners to give us solar panels by providing Australian goods and services in return. So every dollar spent on overseas solar panels is a dollar that gets spent on Australian production. This applies to everything we import.
Sure, we’d be better off if foreigners sent us free stuff. But that’s not going to happen.
I know many people reading this will have this strong gut reaction:
Ronald, you’re a fool! There must be a loss to Australia when overseas products are bought.
So I’ll spend the rest of this blog post explaining why this reaction is wrong.
You Can’t Import Without Exporting
On the topic of international trade, the one overarching point I want to make is:
You can’t import without exporting.
If Australia stopped importing, it would ruin our export industries.
I was born in Toowoomba. It’s the service centre of the Darling Downs, a major producer of cotton, beef, wheat and other agricultural products. Much of this is sold overseas. Australia is the world’s…
- 3rd largest cotton exporter
- 2nd largest beef exporter
- 3rd largest wheat exporter1
Toowoomba’s economy is dependent on these exports. If Australia stopped importing, the livelihoods of tens of thousands of ordinary Australians — as well as plenty of weird Australians — would be in tatters.
This is because the only way you can export without importing is to give away stuff for free, and I’m pretty sure the people of the Darling Downs won’t be thrilled with that idea.
The products we import from overseas pay for our exports and vice versa.
How Imports Pay For Our Exports — An Example
Every dollar we spend on imports is matched by a dollar in exports. Say you want to build a small solar farm and pay Jinko Solar — the world’s largest solar panel manufacturer — one million dollars for 7,500 solar panels.
You now have 290 pallets of panels, and Jinko Solar has one million Australian dollars. You’ve got what you want, but Jinko Solar doesn’t have anything immediately useful to them. They can’t use Australian dollars to pay their workers or buy inputs to manufacture solar panels.
Xiande Li, the CEO of Jinko Solar…
…can’t use it down at the noodle bar to buy lunch.
This is because the noodle bar only accepts Chinese yuan. So if Mr Xiande wants to use the $1 million Australian, he’ll have to exchange it at the bank for Chinese currency.
But a Shanghai bank doesn’t want Australian dollars either. They will act as a middleman and pass the AUD on to someone who can use it — an individual or company wanting to buy Australian goods or services. This is the only real reason anyone not a notaphilist wants Australian dollars. To buy something Australian with them.
Although Xiande Li can’t spend the Australian dollars at the local noodle bar, they could end up paying for Australian wheat used to make their squiggly food. Around 34% of the wheat Australia exports is used for noodles, so some Shanghai food wholesaler could buy those AUD from the bank to buy the Australian Standard Noodle Wheat that ends up in Mr Xiande’s lunch.
Nothing Changes If A Bank Isn’t Used
Nothing changes if Jinko Solar doesn’t exchange the one million dollars at the bank and use it to buy goods from Australia directly. It still ends up paying for Australian production. For example, Jinko uses tens of thousands of tonnes of aluminium each year for solar panel frames, so they could use it to purchase Australian aluminium ingots directly. The Australian dollars still end up being spent on Australian products.
But I Buy Chinese Stuff With US Dollars!
If you’ve ever bought anything directly from China — or many other countries — there’s a good chance you paid with US dollars. This doesn’t change anything. It’s just an extra step. It works like this:
- You exchange Ozzie dollarydoos for US dollars at a bank or other financial institution.
- You pay for your Chinese goods in US dollars2.
- The seller in China exchanges the US dollars for Chinese yuan.
The US dollar is the middleman currency of the world because, despite Donald Trump’s best efforts, the US is still a superpower, and its dollar dominates international trade. The US dollar is convenient because its cost of exchange is low. This is because it’s very liquid. This doesn’t mean Jeff Bezos puts hundred dollar notes in a blender with half a bottle of vodka to make cocktails3. It means there’s always lots of US dollars being traded, so banks never have to hold onto them for long.
Trade Deficits & Surpluses
If exports equal imports, you may be wondering how a country can run a trade deficit or surplus. What happens is, when Australia runs a trade deficit, we import more goods than we export and promise to pay back the difference later. When we have a trade surplus — currently, we’re running one at a record level — it works the other way. When you add in what people owe each other, imports equal exports.
Employment Should Be A Wash
Many Australians, including plenty of farmers on the Darling Downs, work in export industries. Because of this, buying products made overseas should have little effect on employment one way or the other. When you spend money buying overseas solar panels, it keeps Australians in export industries in work.
Trade is — Usually — Win-Win
Trade is — usually — a good thing. If it wasn’t, people wouldn’t do it4.
We’ve all made purchases we’ve regretted, but very few of us want someone else in control of what we can buy. It doesn’t matter if the person in charge is a loving parent who only wants what they think is best for us or Uncle Stalin who only wants what’s best for the worldwide revolution and doesn’t care how many eggs get broken5.
Germany has a movie about a communist kangaroo because, of course they do. (In this scene, the kangaroo appropriates people’s eggs to break.)
Because I don’t want to be told how to spend my money, I extend the same courtesy to others. Sure, I might think the stuff you buy is stupid, but I’ll usually keep that opinion to myself.
So whether you want to:
- Pay extra to get Australian made solar panels, or…
- Buy overseas made panels to save some money.
Either choice is fine with me. Unless you buy panels from a manufacturer without a good reputation. In that case, it doesn’t matter where they were made, I’ll either think you were stupid or — if you were taken advantage of by some sleazy salesperson — I’ll feel sorry for you.
Trade & The Environment
Some may say I’m a hypocrite because I’m against people freely choosing to buy and burn fossil fuels. But this isn’t free trade because the action harms others. Not just the buyer or seller, but the planet. We have to accept some risk of things going wrong, but destabilizing climate and potentially destroying the world’s ability to feed itself is not reasonable.
One environmental concern involving trade is shipping consumes 4.8% of world oil consumption. This isn’t good, but there are also efficiencies and emission reductions from producing products in some locations and shipping them to others. For example, New Zealand and Norway’s low emission electricity means they produce some of the world’s cleanest aluminium.
The world should directly solve the problem of emissions from cargo ships by reducing emissions from cargo ships, rather than indirectly by reducing trade6.
Imports Make Our Lives Better
Some people are dead set against imports. Usually not dead set enough to not buy them when it’s to their benefit, but enough to complain about it at length on the internet that was developed mostly in the US and UK, using a device made of components invented and manufactured around the world, and assembled in China.
International trade benefits Australia by giving us more products to choose from while we specialise in some areas and benefit from other nations’ specialisations. Australians are better off with trade than without it. We’d all be a lot poorer if we tried to make everything ourselves.
Let me put it this way — if you want a country of 26 million to produce all the components that go in a modern smartphone, good luck.
But we could stop importing if we wanted to. We’d all be a lot poorer, but we could get by. No one would have to die. Apart from those who need the latest medical advances to stay alive. We’d just have fewer toys like smartphones, or conveniences such as cheap clothes or petrol for our cars. But other countries are not as fortunate and can’t stop importing.
Paranoia Is A Good Servant But A Lousy Master
Some people are convinced China is hellbent on world domination — or at least Australian domination. They think if you buy anything from China, it will somehow assist China’s murderous plans.
Our best hope for the future is for all nations to become rich and peaceful, and trade is one of the best tools we have for achieving this.
To refuse to trade in the hope of avoiding a future conflict is — outside of some specific circumstances7 — counterproductive.
Doing What You Want To Do Is Fine
If you want Australian-made solar panels, you can pay a premium and I can recommend Tindo Solar. You’ll be supporting the manufacture of panels in this country. If you consider the extra expense well worth it, then Australian-made panels are the best option for you.
If you decide to buy solar panels made overseas, you won’t be supporting the manufacture of panels here but you will be supporting Australian export industries. Because the money you send overseas will be spent on Australian exports, it won’t cause the Australian economy any harm.
Footnotes
- Canada is usually ahead, but we’re taking 3rd place this year. ↩
- If an online merchant allows you to order and exchange money simultaneously, this doesn’t change what happens. ↩
- He only does this with Picassos. ↩
- I’m not referring to situations where people are coerced, conned, exploited, or enslaved. I’m talking about people freely deciding to trade something they have — usually money — for something they want more. ↩
- just so long as no Ukrainians get to eat the delicious omelettes that result. ↩
- I favour a carbon price to reduce emissions from shipping. Still, most of the benefit at the moment seems to come from companies wanting to look less shitty, so keep putting pressure on shitty companies that don’t cut emissions. Also, watch out for companies that only pretend not to be shitty. ↩
- Yeah, Stalin probably shouldn’t have sent all that grain, wood, and oil to Nazi Germany. ↩
About Ronald Brakels
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Tell me where all the components come from that are used to assemble these panels in Australia, pretty sure they are not Australian components
A Glorified assembly plant at a premium, always has been.
Unless a origin of parts list is provided, it still is!
Hi Ronald
You obviously have a very limited understanding of economics so I will enlighten you.
Absolute advantage and comparative advantage are the economic theories applicable here.
Absolute advantage means say Country A can produce a widget cheaper than Country B but it does not follow that Country A should go about producing the widgets to maximise the economic well being of both countries.
The critical test is comparative advantage which is whether the citizens of both countries are better off with Country A producing grommets and Country B produces the widgets.
That can be determined by adding up the value of production, what it sells for, under either scenario and the alternative which produces the highest combined value of production, will be the one that maximises the wealth of of the combined economies.
QED.
Your explanation of currency flows was also pretty poor as well and took no account of how exchange rates change to absorb excess supply of one currency and to stimulate extra demand of the other.
If there is anything wrong in the article please point it out and I will correct it. But I am too lazy to add new sections with new material.
Hi Ronald
I am too lazy to correct your laziness. If you were prepared to pay me for my time in solar panels, your currency, then the answer would be different:)
This website has really jumped the shark if that’s the level of blogging that’s allowed. What a disgrace.
If there is anything in the article that is incorrect point it out and I’ll correct it.
There is the extra question of “modern slavery” or forced labour of persecuted minorities. China supplies 75% of the world’s polysilicon. Polysilicon manufacturers in the Uyghur Region of China account for 45% of the world’s solar-grade polysilicon supply. Do we want to buy materials made in forced labour camps? Will not buying them help those being oppressed?
We definitely do not want to buy products made using slavery. It’s important to be absolutely clear we will not purchase from companies that source materials made with slave labour. This is how we prevent slavery occurring in some regimes — at least in production that is associated with exports.
Thanks Ronald. Are there panel comparison sites that show the extent, or more likely the risk, that forced labour has been used in their manufacture? These thing are not always clear cut. I do not see such a row in the comparison table at https://www.solarquotes.com.au/panels/comparison/compare-solar-panels/
It is not clear if any large solar panel producers are making use of silicon that may have been produced involving slave labour. If there was good evidence we would not recommend panels from that manufacturer. I would expect the Chinese government to at least attempt to keep abuses away from export orientated industries, but sometimes people do terrible things to other people for no good reason.
Isn’t China actually going the opposite direction, threatening corporations that attempt to boycott slave labour and Xinjiang cotton for instance?
All those Aussie dollars don’t get spent on buying Aussie production. They also get spent on buying Aussie farmland, businesses, housing, ports, factories. And some of what we sell is raw materials that are in a real sense other capital assets of Australians and we sell them in a largely unprocessed state with minimal added value. Once they are gone what will our standard of living be?
You have totally ignored the capital account in your analysis!
You have also ignored strategic issues like security of supply in the loss of various industries as we allow such a high proportion of goods to be made oversea and imported, including whole industries like car manufacture.
Also, remember that during the Irish famine English (generally absentee) landlords exported food from Ireland while many of the population starved.
There are many benefits from trade while a country is at peace, but there are risks and costs which might only become obvious in difficult times..
Trade can also have “costs” to some in the community as the Australian lower and even middle socio economic groups are priced out of the market for Australian produce. The best example is lobster. The middle class ( in Australian terms) in China is say 300 million, in Indonesia say 40 million, in India say 200 million. So the Australian lower middle class rarely eats lobster any more, except during Covid wnen exports became difficult (as we all know from the lobster example). The same thing is applying with the best of Australian produce in other areas, it’s just not as obvious as with lobsters. .
Then there are costs born by those who lost often well paying and skilled jobs when manufacturing disappeared overseas, with many new jobs being lower skilled, lower paying, insecure and subject to competition from backpackers, thus holding wages to negative real growth. Sure most Australians are buying cheaper goods and that is a benefit that has to be considered too, and classical economics shows that trade is a benefit to both countries, but it deosn’t model the difficult times are the winners and losers in the domestic economy or concern itself on the distribution of the benefits among society. Are they held by the well off export business owners, or are they spread among society through higher wages?
Trade is far more complex than your analysis suggests and there are losers as well as winners, and in difficult times even many who are often winners can turn out to be losers too.
It is free trade that brings wealth to impoverished countries. How that wealth is distributed is another issue as is dealing with goods with negative externalities such as creating pollution. To paraphase a well known saying, it is free trade that offers the best solution to advance the well being of citizens of ALL countries. It has it flaws which requires government intervention on the margins but there is no better alternative. The world has tried communism, facism, dictatorship and they all lead eventually to economic ruin.
“ You have also ignored strategic issues like security of supply in the loss of various industries as we allow such a high proportion of goods to be made oversea and imported, including whole industries like car manufacture”…
… the Productivity Commission recently did a study on Australia’s “Vulnerable Supply Chains”. Key finding: Australia’s supply chains aren’t, er, vulnerable.
So we don’t really face any security issues because our production is overseas.
https://www.pc.gov.au/inquiries/completed/supply-chains#report
Jim,
I wouldn’t put much value in the findings of the Productivity Commission.
Nothing happens without energy.
Diesel is currently the world’s principal transport energy resource.
Disruptions to, or sustained declines in global petroleum fuel supplies, particularly with diesel fuels, means global supply chains (as they are currently configured) will become disrupted.
See my comments at: https://www.solarquotes.com.au/blog/sa-electric-car-subsidies-mb2266/#comment-1333058
Also: https://www.solarquotes.com.au/blog/sa-electric-car-subsidies-mb2266/#comment-1334526
And: https://crudeoilpeak.info/australia-crude-oil-import-vulnerabilities-sep-2021-data
That’s a fundamental national security issue.
Sorry, but no.
The Productivity Commission is a highly respected and independent body that critically evaluates issues based on evidence. If you don’t accept its reports, then I’m not sure what would persuade you?
There is no vulnerability in our fuel supplies simply because they come from overseas. This was extensively proved by the Productivity Commission itself and also by the more thoughtful submissions to the PC (by which I mean those that are more than a couple of pages of bulletpoints).
Then there are the many and repeated studies by Hale & Twomey that say there are no fuel security issues, as there are also by ACIL Allen.
Perceived vulnerabilities in fuel security is only going to become less and less important as the world moves toward renewables and storage.
Meanwhile, here in Australia, we may well end up with a strong renewable methanol, ammonia and hydrogen fuel-supply industry because of our absolute and comparative advantages in solar and wind.
You may well get your wish of a domestically-based fuel supply industry that serves the global markets…. if we go hell-for-leather in decarbonising our own domestic supply first.
Issues like that always open up a can of worms. I questioned Solar Quotes some months ago about the supply chains for batteries, i.e. what comes out of the Congo re. cobalt etc. There doesn’t seem to be a clear answer or solution.
Tesla now is the most highly valued car manufacturer on the planet, and nobody gives a shit about some poor guys in the Congo, or whether Elon Musk disallows unions. That’s capitalism. As things go, we all are beneficiaries of that system, which exploits people less fortunate. I’m no supporter of that system (incl. massive tax cuts and tax avoidance by corporations), but that’s the case in place for the time being. By all means, bring on some federal ICAC in our country to clamp down on unethical issues and pork barrelling. But don’t blame some importers of Chinese merchandise, as long as they follow the current rules.
Yes trade is complex and much more complex than the picture you create.
For example you have completely ignored how selling lobsters overseas all other things being equal benefits ALL Australians because it will force the exchange rate up for Aussie dollars and so Australians will be weatlhier in world terms and more Australians at the margin will be able to take overseas holidays, buy that import etc.
Is that positive offset the negative of a select few who would be able to afford lobster in the first place, and lets not pretend thats the struggling class who would be going out buying lobster.
I say absolutely and that is how world trade works everyone on average is better off and there is a few, such as lobster fisherman who is much better off and there is a few like Australians who eat lobsters who are much worse off.
Here is hoping SunDrive succeeds; even if it is with Nexwafe wafers.
https://www.sundrivesolar.com/
Ronald, unfortunately you’ve been taken in by the spin doctors promoting the continued hollowing out of Australia.
For example, whilst a single can of Italian Tomatoes may cost 10 cents less than the SPC equivalent ($1.00 vs $1.10) – the impact on buying just a single can of Italian Tomatoes on Australia as a whole is a negative impact around $1.50 to 2.50.
This is known as the multiplier effect.
If you bought the slightly more expensive SPC tin then nearly all of the $1.10 remains in Australia (I won’t delve into the Mafia ‘slave workforce issues’ in Italy – if interested just do a search on it).
At all stages of the journey for the final product – tomato seeds planted, transplanted, tended & harvested, packed for transport to a cannery, canned, boxed, transported to wholesaler or Coles/WW directly, … Australians are being paid wages to do the job. The various farmers/companies involved are employing Australians & paying taxes (no they’re generally not multi-nationals paying zero tax (yet)).
Multiply your/my purchase of 1 tin of Australian grown tomatoes x annual demand by the Australian population and all of a sudden it becomes a major improver in Australia – around an additional 10 to 12,000 jobs throughout the supply chain (more than the number employed in all coal-fired power stations AND working in thermal coal mines supplying them).
Around 5 or 6 years ago Australia lost 70% of all orange production as the price of orange concentrate from Brazil (IIRC) undercut the cost of Australian production & the major retailers switched the bulk of their orders from Australian farmers/orchards.
Those Australian farmers/orchards then were forced to bulldoze their entire orange orchards (do a search and find out how many millions of trees were destroyed).
The total cost to Australia, after the multilpier was taken into account was around 6,000 full time jobs & $2.5 billion/year. At the cheapest a 3 kg pack of oranges was then sold in the shops for $1.99 at peak production each season.
Now the cost is typically $3.99 at the lowest and up to $6.99 in the major chains. This cost increase sees the adverse impact on Australia as a whole of around an extra $3 billion as the bulk of the extra goes overseas.
All this without considering the food security & food safety issues.
For example, work I did in the early 2000s on China uncovered that around 70% of China’s fresh water supplies were so polluted that if you poured some on grass – it died. Hence China’s insatiable demand for Amazon land clearing to grow crops to feed China.
Oddly enough though, China is the worlds largest exporter of frozen fruit & vegetables (if the smoke & mirrors are dealt with).
Australia unlike pretty much every other OECD country has no Govt testing of imported foodstuffs, none, nada, zilch.
By comparison, do a search on ‘US food import testing China contamination’.
One example I know of directly was the substitution of melamine into milk powder by a Chinese Dairy company (largest in China) which resulted in (unofficially but directly from the shortly thereafter executed CEO [30 hours later & hos entire family was never seen again] who had videos of the local CCP boss collecting the blackmail demanded & required the company to take milk from three ‘favoured’ dairy farms who secretly were adding the melamine) more than 30,000 deaths in babies/infants worldwide. The CCP claimed it was ‘only’ some thousands.
So many babies died from melamine poisoning & it was put down as Sudden Infant Death syndrome (SIDs).
Yet the Australian Govt does no random testing. When I confronted Coles & Woolowortha about this – their response was along the lines; “It is specified in the contract that the supplier guarantees the product meets all specifications”.
In other words – the companies turn a blind eye to it, I was told that they do no product safety testing to ensure specifications are met.
As a result of my investigation into China’s fresh water supply – I started looking at the country of origin information on frozen fruit/vege packets in Coles, WW, Aldi. There was not one frozen broccoli product that contained Australian grown broccoli (for example). Guess which country thay all came from? China.
So I started a whispering campaign through the finance industry appealing to their self-interest in their own health & every time in a supermarket I’d mention this (loudly so I was easily overheard) to other shoppers. Similar with frozen beans, peas but not 100% China.
WW was the first to respond (buckle?) and introduced ‘Australian grown’ peas, beans & broccoli.
As news of this spread (via international brokers) Chinese sourced frozen vege/fruit sales got seriously hit in Australia, NZ, US, UK & the EU.
So China began exporting container loads of frozen product in bulk (unpackaged) to NZ & Belgium (that I traced). Have a look at how many packets of frozen fruit/veges now are either packaged in or product of NZ or Belgium.
Both countries, the last time I looked are the top 2 destinations for Chinese frozen fruit/veges. Belgium exported 14x its production of green beans in 2015…
Crikey. I live in Darwin, and I haven’t been able to find SPC products anywhere since I really started looking some months ago after seeing the company’s Shepparton factory on television.
You know what? It would be even better if they started to sell Australian foods in addition to those of our British diet that we brought with us to this continent.
To get your local supermarkets/shops to stock a certain product or products – all you need to do is ask for that product every time you go shopping. After a few visits ask to see the manager.
At the same time, if you know others who may want to buy ‘Australian foodstuffs’ then encourage them to do the same. The more spread the requests are (across numerous suburbs) the more likely that store chain will try out that product.
I’ve done it for several products over the years. Some have lasted while others were only carried for 12 to 18 months. If you create ‘perceived demand’ then companies will try to profit from it (as long as the local store managers aren’t bad operators).
BTW – Thailand, due to its cheap labour saw a number of car plants built their and they export to Australia (or at least they did the last time I checked in mid 2010s), also some fabric comes from Thailand etc.
Once again half the story is being told and I dont have time to rebut all of the facts with my facts but I will give you a sample.
The importer has employees.
The can of tomato imported from overseas does not appear magically at the supermaket it goes through a supply chain as does locally grown tomatoes
By buying tomatoes overseas you are helping to push Australian dollar down all things being equal and that makes Australian exports more competitive
The tomato can coming in on a container ship will lower the price of exporters who wish to put their goods on that container ship when it continues its journey.
The farmer not using the water and the land to buy the tomato will make it cheaper for a farmer to grow an alternative crop and something higher value than frozen vegetables eg grapes, almonds.
Etc, etc
The importer has employees = True
Fact: The number of employees for an importer vs total within Australia supply chain is at most 1/4 to 1/6th those for Australian grown, packaged & sold goods.
Foreign goods go through a supply chain = True
Fact: The bulk of the supply chain is in an overseas country, so are the jobs, wages, taxes & multiplier benefits.
The foriegn tin comes in on a container ship – True
Fact: Australia runs a ‘processed, packaged goods’ deficit annually in the tens of billions. In a typical year around 30 to 40% of containers leave Australia empty, another 5 to 10% leave Australia partly filled.
Fact: over 90% of clothing, furniture, plastic is imported into Australia.
Over $2bn of paper is imported each year, the bulk of which was made overseas using wood chips from Australia. We buy the processed wood chips back at around 20 to 100x the price we sold them for.
Land & water not used for tomatos makes it cheaper for another farmer….
In theory should be correct but in practise not the case due to the under costing of water used in Cotton, Almonds, Avocadoes etc etc.
That is why so many regional towns in NSW (especially) and elsewhere ran out of water despite cotton & rice farms using more than 2,000+ times the water required by the towns during the same year. Private donors were required to buy bottled water for one town…
Do a search on ‘Blood water: the war for Australia’s water’ for just one example of what the reality is.
BTW Commercial tomato growing is extremely environmentally friendly as there is very little water lost to evaporation etc in modern large scale greenhouses.
Try and posted a long reply days ago but it was blocked because I was talking too much, would have been nice to have been given the heads up first!
Anyway trying to keep it short and moderator I promise this will be for last post for 48 hours and 5 minutes:)
Your facts although may be interesting they don’t add much to your argument in my opinion:
Who cares if container ship leaves Australia mostly empty, that does not destroy my argument as the fact that it will be leaving empty would have been factored in by the shipper.
You completely ignore how buying tomatoes overseas will tend to push the exchange rate down and help exporters, I believe exporters have the highest multiplier effect of any sector in the economy.
You provide no solution to your demand that Australians should be forced to buy local tomatoes which is a value judgment you have.
If your solution is to introduce tariffs then given Australia is a net export of agriculture not only would you be shooting yourself in your foot but you would be blowing your head off as well.
It’s also worth noting that, at the very least, at least 10% of the Australian workforce is employed in logistics and supply chains, which is about 1.25 million workers. That’s almost certainly an underestimate too.
Another important point is that international trade leads to cheaper prices in Australia, which means that the Aussie dollar in the hip pockets of Australians goes further (I.e. Aussies can buy more stuff) which reduces poverty and improves the standard of living of Australians.
Looking at 2019 data from OEC, raw cotton comprise 0.38% of Australian exports, frozen bovine meat 1.69%, bovine meat 0.96%, and wheat 0.94%, so big for Toowoomba perhaps, not so much for Australia.
Australia’s big exports are iron ore (23.8%), coal (18.1%), petroleum gas (12%), and gold (8.95%).
39.1% of exports went to China with iron ore comprising 49.7%, petroleum gas 10.7%, gold 8.64%, and coal 8.45%.
The next largest trading partners are Japan (14.6% of exports), South Korea (6.66%), India (5.38%), Britain (3.74%), the US (3.62%), and Taiwan (3.21%).
Australia’s import situation is vastly different – refined petroleum at 8.03% and cars at 7.59% being the largest items. China is of course the largest trading partner, supplying 25.2% of products, but Australia also imports 11.9% from the US, 7.12% from Japan, 4.97% from Germany, and 4.8% from Thailand of all places.
Curiously enough New Zealand is waaay down the list for either exports or imports!
Oh I’m definitely one of those people inclined to think China is looking for world domination and potentially kicking off WW3. Given border skirmishes with India, claims to Taiwan, seizure of foreign parts of the South China Sea, threats of nuking Japan, and their general arrogance and hostility towards Australia, why bother spending money on Chinese products when alternatives exist? Why subsidise an imperialistic regime when you can support friendly nations with better quality products instead?
So, yes you can buy Australian, or you can buy anything non-Chinese – South Korean, Japanese, Taiwanese, American, German, and probably a few others too, or well you can support China. Me, I chose to go non-Chinese, but that’s my choice. Those who go Chinese get a cheaper product, and can get a better FiT. Will the product last as long? Ask me in a couple more decades : )
I don’t claim to be in any way skilled in global economics and trade, but one thing I do know in my gut is that Australia needs to start heavily investing in the manufacture of solar panels and related components NOW!
If we are to reach any of the emissions targets that we are signing up to, we simply cannot rely on other countries, especially China to supply us. And why would we when our scientists have made more than half of the major technological breakthroughs in solar module design and efficiency over the years?
Given that 1. We have all of the raw materials required to make a solar module right here, 2. we have the smarts, 3. we have the demand and 4. more than ninety percent of the entire process of making a solar module can be automated, it is not only an incredible opportunity but a complete necessity that we do so within our shores.
The Government needs to very quickly incentivize this type of investment across all channels. I could list 100 breakthroughs that Australian scientists have made in solar and I know we can be the most efficient when it comes to “backs to the wall” manufacturing.
By my calculations, we will need between 500 to 700 Million solar modules installed in this country to cover our full energy requirements including transport and logistics by 2050. Let’s make our own solar and then export any we can.
Yep, Ronald’s economics lesson was somewhat over simplified. But I’m ok with that; a large part of the study of economics is working out which assumptions you are going to ignore & which ones you are going to explore.
But the important detail is this:
If all the economists in the world were lined end-to-end, they still wouldn’t reach a conclusion.
Well I’m not an economist and maybe I can’t following these arguments. But this debate has a air of someone trying to explain perpetual motion machine when we know this is impossible no matter how ingenious the proposition.
Imagine you’re a survivalist living deep in the bush. Put aside complications such as using up natural capital, theft and charity. One day you decide you need a screwdriver – can’t make one so what to do – become a dirty rotten importer. But you need some money unless you find someone with spare screwdrivers who wants my excess chokos – either way I have to become and exporter of either chokos or my labour. How is this individual different from a nation state? I can’t see one.
So it seems to import I must export. But is the reverse the same: must I import in order to export? Well I can export chokos till the cows come home but what do I do with the money. It’s no use within my survivalist community – we could have our own internal money for internal trade without regard to external money. The only thing I can do with value accumulated from selling chokos is either throw the money away or import something.
So that’s it: If you want to buy only Australian made your are making it that much harder for Australian exporters. I dunno –it seems to me Ronald’s on the money here.
yeas ago i spent 7 k on a stand alone solar system from the nice man i trusted it never worked properly .i WILL never ever trust a chinese warranty.
Some time ago i wrote to our alleged trade minister pointing out the eminent closure of another fertilizer factory .That is 6 plus factories gone and then SURPRISE china -major supplier stops exports. [the honorable member totally ignored the situation] AND we will soon import ALL our fuel We did have holden and ford for cop cars and civil service. was it cheaper for a small subsidy or lose the skills and pay the extra for bmw,s We DONT have any apprentices coming from the auto industry ever again.
SO totally importing any product if we have an option is not clever
I bought Australian cars and they cost me a bomb in money because some ***ker in their design departments decided to save $10s of dollars which cost customers $,000s if they fail. Should buy on price and quality and reward those who provide that. I don’t care where they come from. That is called being a good global citizen. Products of slave labour etc excepted.
The theoretical economic principle of comparative advantage – so beloved by Keynesian economists – can completely break down under the combined collective pressures from such things as:
: political instability
: environmental pollution
: supply disruption from extreme weather events
: changing national security considerations
Mingling with the above is also a 5th item – an implied assumption that the parties involved are all dealing honestly with each other and supplying their ‘Item A” in exchange for your ‘Item B” at the originally agreed quality.
There are many other factors involved of course, and things change over time for all sorts of reasons, but I’d suggest that the 5 things I’ve listed above are likely the major concerns of many at the present time.
Because of those current specific and also constantly changing concerns, it seems to me completely dumb to have all your eggs in one or very few different baskets in what is currently a very troubled world, and continue to mindlessly apply as virtually your sole criteria that of ‘cash cost’.
.
Des Scahill,
“: changing national security considerations”
China is one of the largest producers of urea and has exported large quantities of the product around the world, including to Australia.
China is facing a rising fertilizer crisis, so in order to mitigate this, it has decided to restrict exports.
Urea is a critical component for the manufacture of the additive AdBlue/DEF for reducing diesel engine emissions. Modern diesel-fuelled trucks cannot operate without it.
Published recently at ABC.net.au was an article by Hugo Rikard-Bell headlined Has the AdBlue shortage reached crisis point and what does it mean for drivers and consumers? It included:
https://www.abc.net.au/news/rural/2021-12-14/has-the-adblue-shortage-reached-crisis-point/100700420
John Blackburn, former deputy chief of the Royal Australian air force, has raised energy security concerns:
https://www.theguardian.com/australia-news/2021/dec/16/australian-adblue-shortage-2021-diesel-price-supplies-australia
IMO, it’s an example of how quickly circumstances can change, and national security issues are shown to be more precarious than the ‘official’ narrative, including those of the Productivity Commission.