China bad US worse

Australia’s treasurer, Peter Costello, made an incredible statement last week. Incredible for someone aspiring to be prime minister, to assure voters of the integrity of the economy and who would one day be dealing with both US and Chinese leaderships.

He warned of a "huge tsunami" set to engulf global financial markets, with China as its epicentre, and the US weakening in the wash-up from the sub-prime fiasco. Actually I expect his reasoning for a US collapse was diplomatic if not reticent.

But the whole tsunami metaphor, the China prediction, has had me thinking. In fact it has had me researching so that I could put Costello’s comments into a reasonable context. The fact is, I’ve never been comfortable with my understanding of the Chinese culture, but I’m learning.

Costello was commenting after Figures released showing the Chinese economy grew at an annual rate of 11.5 per cent.

"All flows of capital they have been sending to the US might reverse, and you will get a major realignment on major currency markets," Costello said. "China is very strong but you can't just grow an economy in double figures on a long-term basis."

For those interested I intend to share some of the fascinating data I’m digging up on China. Bearing in mind that economics should reflect social as well as financial I’m playing around with a range of issues and sources.

Why? Australia’s current surpluses are off the back of China’s rapid growth. We are supplying coal, iron ore and other essential raw resources and that is delivering tens of billions of dollars each year into the foreseeable future.

Look at some of the development:

• China is commissioning a new coal fired power station every week.
• Every week China is constructing the equivalent of a city to acomodate one million people.
• Much of the particulate pollution over Los Angeles originates in China.

In 2007 Australia is exporting iron ore-and coal, and gold, and other commodities-to the tune of $117 billion in earnings, according to the Australian Bureau of Agriculture and Resource Economics (ABARE).

For all of that the China treasure is problematic for this country. First up it is relatively chump change in the scheme of things. We are digging and shipping the country at a frantic rate, for a petty return.

The second concern is, chump change or not, our economy can’t absorb the pittance left over from the mining industry for developing essential infrastructure and social needs, including hospitals and health. That is a story on its own, but we are already seeing the inflationary effects of this bounty.

I’m not sure that the dalliance with China, the US or globalisation generally, does anything positive for Australia. Shipping out our raw products doesn’t, it seems. Playing the US ‘globalisation’ game certainly doesn’t.

We are losing on many fronts, including the diversity required to feed, house and assure the general well being of the population. We are assisting in generating the very climate change that is already causing havoc on this fragile continent.

I am not a nationalist, by any means; certainly not in any political/geographical sense. This continent is a treasure which the whole of the planet should be celebrating, not mining and destroying.

The US we already dissect constantly on the blogs. I intend to share some of the data I’ve been collecting on China. Working to understand that complex of cultures has been an eye opener. I won’t pretend to be expert in any sense, but I hope I can put some valid discussion points out there.