China's economic colonisation down under

[TheWrathOfGrapes]

China's economic colonisation down under

WILLIAM PESEK

All in. That is essentially the message Treasurer Wayne Swan is sending about Australia’s odds-defying bet on Chinese growth. The government’s
latest budget pledges to deliver the quickest improvement in the nation’s finances on record — without specifics about how that will happen.

The absence of such detail is telling and can be boiled down to one thing: An even bigger gamble on China’s 10 per cent growth and its voracious appetite for Australia’s resources. It is risky to so fully hitch the hopes of 23 million people to a single nation that is still developing.

Hypocrisy was in the room last month when Australia rejected a Singaporean offer for its stock exchange. Mr Swan called slapping down the Singapore Exchange Ltd (SGX)’s US$8.8 billion (S$10.9 billion) bid for ASX Ltd a “no brainer”. The whole shareholders-come-first vibe that pervaded before the global crisis lost its oomph among voters.

The debate distracted attention from a far bigger takeover happening by stealth: China’s designs on all things down under. Down under the ground, that is.

The stock market deal would have been just a corporate merger,
not exactly an affront to Australia’s national identity. Australia is a massive nation with vast natural resources, while Singapore’s land mass is dwarfed by the Great Barrier Reef. Singapore Exchange’s ownership of the ASX would not be a financial colonisation by any stretch of the imagination.

Of course, if a critical mass of Australians has reservations about something, lawmakers must listen. And listen, they did. Yet arguments for quashing the takeover — deterring investment into Australia, for example — were tenuous. Everyone knows Australia’s resource sectors are booming and those who want a piece of it will not care who runs the ASX.

The real colonisation is arguably taking place on the ground — or, more to the point, beneath it — in Western Australia. China’s voracious appetite for raw materials to fuel its rise is at record levels and set to continue rising.
It is leading to bubbles in the 13th biggest economy.

Press reports are full of tales of 24-year-old miners with no college degree making more than Federal Reserve chairman Ben Bernanke’s annual US$199,700 salary. And Mr Bernanke gets less compensation than Reserve Bank of Australia Governor Glenn Stevens, which many economists around the globe would see as a kind of monetary justice.

In a world wracked by crisis and uncertainty, Mr Stevens has been a steady presence. Australia was that rare developed economy that avoided recession amid the 2008 global crisis. Banks there were not devastated by the toxic debt that undid many of Wall Street’s biggest names.

Mr Stevens, though, faces a tantalisingly difficult challenge: Combating rising wages that could prove inflationary, while not killing growth. The China effect is a key element of this struggle. A wage-price spiral would
only exacerbate Australia’s “twospeed economy” problem.

China is feeding a growing disparity between Australia’s resource-rich western states and Queensland and the rest of the country. Does Chinese demand mean Australia has too much of a good thing on its hands? What
if China suddenly slowed?

With Chinese inflation holding at more than 5 per cent last month while lending exceeded analysts’ estimates, overheating risks are rising.

Australia is flirting with “Dutch disease”, whereby financial benefits of a resource boom lead to a hollowing out of other sectors. The worry is that Australia becomes all too happy to be a mining site for China and takes
its focus off a more diverse economic future. Certainly, the savvy financial-services and technology professionals busily working in Sydney and Melbourne demonstrate the economic modernity that drives growth.

Australia is surely on a tear, sending the local currency toward record highs. Yet too much focus is on the 17th-century model of digging things out of the ground and loading them on ships.

Chinese demand is becoming an addiction and it will force politicians and voters to adapt. Immigration is a case in point.

Australia plans to import about 16,000 workers to plug holes in the labour market. You cannot expect to ship mountains of coal and iron ore verseas and also limit importing labour and foreign takeovers.

It is not working for Japan and it will not work for Australia.

As the 21st century unfolds, the consensus is that it belongs to Asia, particularly China. Australia’s latest budget shows that Prime Minister Julia Gillard is turning further away from the US and Europe toward this region.
That makes perfect sense given its economic potential.

What doesn’t is failing to harness the ingenuity of Australians. Their future in an ever-globalising economy is about ideas, innovation, education and upgraded infrastructure. Australia’s budget punts all these challenges forward. Why make tough decisions when you can double down on China?

We tend to focus on how China’s growing role as benefactor is reshaping, for better or worse, nations in Africa, Asia and Latin America.

Little is said about the consequences of highly-developed nations casting their lot with an economy that could be hit by anything from asset bubbles to social instability. Talk about a roll of the dice.

Bloomberg

William Pesek is a Bloomberg News columnist. The opinions expressed are his own.

[Kubes.SG]

China's economic colonisation down under

WILLIAM PESEK

All in. That is essentially the message Treasurer Wayne Swan is sending about Australia’s odds-defying bet on Chinese growth. The government’s
latest budget pledges to deliver the quickest improvement in the nation’s finances on record — without specifics about how that will happen.

The absence of such detail is telling and can be boiled down to one thing: An even bigger gamble on China’s 10 per cent growth and its voracious appetite for Australia’s resources. It is risky to so fully hitch the hopes of 23 million people to a single nation that is still developing.

Grapes, I like Pesek's writing.  He is always on the mark and so it is with this article.  However, the headline seemed strange and not consistent with the article.  It took me about 5 seconds to discover the real headline is: 

"Down-Under Hypocrites Bet All on China’s Boom: William Pesek"

Really?  why try to distort the message from a good tough article? 

The correct headline is much truer as it reflects the astonishing hypocrisy of the Gillard Govt.  I thought Pesek was going to address the idiotic climate change mantra in Australia.  Gillard's Govt, the worst in the history of the Australia, want to impose a carbon tax, while they push to export hundreds of billions of tons of coal and gas every year to the rest of the world.

Look despite the hiccup of the current idiot Socialist+Greenie idiots in Govt now, Australia's economy has been extremely well managed, leveraging the massive benefits of its natural resource and geographic location.  The challenge really is managing the boom, and balancing for any Chinese and Indian downturn.

Frankly the SGX and ASX marriage was stupid.  It was a beat-up to fulfill some small-man syndrome that pervades most investment decisions in Singapore.  It made no sense, it provided no benefits for Australia and it was rightly rejected.

[TheWrathOfGrapes]

The object in life is not to be on the side of the Majority, but to escape finding oneself in the ranks of the Insane.

Hmmm, after all these years you are still escaping.......

[so what]

The object in life is not to be on the side of the Majority, but to escape finding oneself in the ranks of the Insane.

Hmmm, after all these years you are still escaping.......

Of course he is.
According to Kubes, in Singapore the Majority of the people is insane.

[Vulcanl]

Wrath,

I prefer the subject line you used for this thread, with the operative word being 'colonisation,'  as in a most thorough intrusion and cleansing. 

Eventually it will be a situation where China will say 'Jump' and Australia will say "Yes, Thank You Sir - How High, Sir, please?!??!?!?!?"

[so what]

Eventually it will be a situation where China will say 'Jump' and Australia will say "Yes, Thank You Sir - How High, Sir, please?!??!?!?!?"

Or the Chinese do the same as Australia's previous colonialists.
China has something like 1.5M criminals in jail that can be offloaded...