Australians generally refer to the Great Financial Crisis as “that thing that’s happening to other countries”.
Much of our smugness is based on our tidy relationship with
What’s that worth to us? Exports to China in iron ore and coal alone were worth more than $25 billion last year. Our next biggest export – wool, was worth a lousy billion.
In addition, our other two biggest buyers, Japan and South Korea, buy over $40 billion in minerals, but sell a hell of a lot of their finished goods to China. You start to see how much we depend on the Chinese.
So, how far can we ride the dragon?
To predict that, you have to answer two underlying questions: What is
The second question is easy: The Chinese have the world’s largest reserves of
As to where its all going, they seem to be building real estate and making exports for the
And that’s where I started getting scared.
On its face this sort of growth seems unsustainable and fueled by pure speculation, but people keep piling in.
Their other big and continuing push is exports to the
I suspect the answer is yet more debt for a country that already has $13.5 trillion in household debt.
So the question that should be keeping every Aussie up at night: What happens if the Chinese real estate bubble bursts or the
Pull up a chair….I suspect we’re going to find out soon.