China - friend or foe ?

There is no doubt that trade with China allowed Australia to escape the worst of the world financial crisis that started in 08, but whether this long term trend will continue to deliver our financial health is becoming a moot point !

In the past decade sales of three commodities - iron ore, coal and natural gas have enabled China trade to constitute 12% of our GDP.    Expansion plans, new projects and enhancement of export ports indicate that in a further ten year period that figure will increase to 35% - and there seems no limit on a further expansion in the distant future.

That is a lot of eggs to have in one basket !

The question is - what sort of country will China be a decade or so from now ?

Statistics tell an ominous story.  China's People's Liberation Army ( PLA ) is the biggest in the world and China is signalling that it intends to strut it;'s military might on the world stage.  It is developing stealth fighter aircraft - and is about to commission it's first aircraft carrier - with four more on the drawing boards, including two to be nuclear powered.

This military might, plus a well developed internal police system keeps the lid on any sort of protest movement.  Unlike any western country that needs to appease the voters to stay in office, China has the power to make unpopular decisions and implement them on it's citizens with impunity.    The fact that it commands huge trade surpluses means that the money is available to fund not only traditional military power - but also what may be termed " future warfare  - the use of computers to attack and disable another country's defences and throw it's commerce into disarray.

As Chinese power grows, so does the capacity to impose it's will on it's suppliers.  It is well advanced on a plan of diversification by way of funding new mines in parts of Africa and the Middle East and eventually this will allow it to use it's buying power as a weapon to impose policy demands.

Australia would be well advised to slow this headlong rush to expand trade.  The world need for the energy flowing from natural gas, and the need for steel produced from coal and iron ore will only continue to increase as more third world countries expand their horizons.

The clever country limits the depletion of it's gas, coal and iron ore reserves to assure a steady flow of export income well into the future, rather than a greedy rush for instant profits - to a singular market.

Hopefully, the Australian government will keep it's finger on the control button and make sure that Australia does not mortgage it's future in an " expansion at any price " depletion of it's natural wealth !