Rebounding WA warns against riling China

China is helping WA's economy rebound, leaving its staggeringly popular premier loathe to join calls for an inquiry into the coronavirus outbreak that sparked fresh Sino-Australian tensions.

West Australian Premier Mark McGowan cleans the bar with Bar Bizu owner Jimmy Durante after a press conference on isolation rules.

Julie-anne SpragueRich List editor

May 1, 2020 – 12.00am

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West Australian Premier Mark McGowan says the state's economy is on track to regain its footing faster than the eastern states and has warned against inflaming tensions with China, the state's biggest trading partner, which is underpinning a massive iron ore royalty windfall.

Mr McGowan, a Labor leader enjoying extremely strong support in a typically conservative state, urged caution as tensions with Chinaescalate over Australia's role in seeking an inquiry into the coronavirus outbreak.

“I just urge everyone to exercise restraint and diplomacy,” he said.

Asked specifically if Australia should support a coronavirus inquiry, he said: “As the Treasury secretary Steven Kennedy said, without Western Australia's mining industry the nation would go underwater, so we have to keep that strong and we have to keep our customer base strong. That means having a balanced and reasonable trading relationship with our partners, including China.”

His comments come as two of the state's billionaires, mining magnate Andrew Forrest and media mogul Kerry Stokes, warn against provoking China, with Mr Forrest's ambushing of recent government press conferences in Perth and Melbourne allowing Chinese consular officials to publicly spruik the party line.

Mr McGowan said there was no doubt many people around the world would undertake work to prevent a global pandemic occurring again, but “we should still retain good relationships with our major trading partners”.

The state is getting an enormous economic buffer from robust iron prices, which have remained above $US80 a tonne throughout the crisis as supply issues from Brazil and Chinese demand provide a healthy floor for the nation's biggest export.

There's no doubt [the Premier has] had a massive step-up in profile and purpose.

— Martin Drum, Notre Dame University political analyst

If iron ore holds its ground at about $US83 a tonne, that would generate an extra $1.4 billion in income for the state that it hadn't budgeted for next financial year. In December, Treasury officials expected prices to average $US66.20 a tonne compared with $US85.80 this fiscal year.

The massive iron ore windfall would more than offset a drop from North West Shelf royalties due to the depressed oil price, which could knock about $520 million off expected revenue.