China's twin strategic development of iron-ore imports along the maritime silk road: Economic security and decarbonization of maritime industry

Abstract

This paper aims to analyze China's iron import trade patterns and estimate transportation costs of iron-ore from Australia and Brazil. A twin strategic framework of iron-ore imports from the perspective of economic security and decarbonization of maritime industry is proposed to overcome geographical disadvantage for Brazilian iron-ore suppliers. Augmenting capacity through the deployment of ChinaMax with 400,000 DWT to leverage from economies of scale (so-called economic security strategy) and establishing the longest Green Shipping Corridor (GSC) (so-called decarbonization strategy) are recommended. This will enable Brazil to utilize zero-emission ships that consume green (alternative) fuels. The GSC strategy with zero-emission ships is innovative yet challenging to decarbonize Brazilian Iron-Ore Supply Chain through backward and forward linkage effects. The integration of cost estimation methods with political economy arguments to maintain a balance between China's strategic interest and economic value addition with decarbonization, and maritime security of raw material resources is future proof to business disruptions. The paper concludes by proposing a strategic framework discussion and strategic insights for China.