Australia warned on Monday that the “softness” of China’s economy and tumbling iron ore prices could leave a multibillion-dollar hole in the nation’s budget.
Troubles in China’s massive construction sector have seen iron ore prices drop about 30 percent since the start of the year — and the ripple effects are now being felt in Australia.
Australia is the world’s largest producer of iron ore, the main raw component for making steel used in building homes, railways and other infrastructure.
Photo:AFP
Australian Treasurer Jim Chalmers warned the “softness in the Chinese economy” and sinking iron ore prices were reminders that Australia was “not immune from volatility and uncertainty in the global economy.”
His department now believes the faster-than-expected fall could reduce tax receipts by about A$3 billion (US$2 billion) over the next three to four years.
The metal accounted for 18 percent of Australia’s total exports last year. After months of worry about China’s ailing real-estate sector and excess manufacturing capacity, the price of iron ore sank by more than 7 percent in the past week alone.
China Baowu Steel Group Corp (寶武鋼鐵集團), the world’s largest steelmaker, last week warned that the sector’s troubles could be longer and more severe than expected.
Australian mining firms have already taken a hit, with shares in Rio Tinto Ltd and BHP Group Ltd — two of the world’s biggest producers — down about 20 percent since the start of the year.
Reserve Bank of Australia Governor Michele Bullock told the Australian parliament last week that given the country’s dependence on China, she was watching the situation closely.
“Developments in China can have quite a big impact on the way our trade develops, and therefore on our growth,” she said.
“It’s our biggest trading partner, and it’s very important in particular for the prices of the commodities that we export, in particular iron ore,” she added.
The Reserve Bank of Australia remains some way off easing monetary policy, as inflation is proving persistent and would only return back to the target range late next year, Bullock said last week.
The Reserve Bank has kept its policy rate at a 12-year high of 4.35 percent since November last year.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS