Archive for February 2nd, 2008
If China catches a cold…
February 2, 2008As I said yesterday, Aussies are paying close attention to Presidential election primaries and to fluctuations in the US economy.
The sharp drop in the share market that began here last month is attributed to fears of a recession growing out of policies shaped in Washington, D.C. The great majority of the well-informed here can hardly wait for a “regime change” in America and they expect the US to be on a saner course by this time next year.
But for hope of safety in rough economic seas, folks here are looking elsewhere, toward China.The supply of iron, alumina, coal, and other raw materials to China as its vast population moves up from poverty is buoying Australian prosperity now and is counted on to continue to do so.
The old economic health analogy, therefore, is applied to that country, not the US. An article in “The Australian” newspaper this week, headlined “China’s bubble quivers,” said, “If China catches a winter cold, Australia sneezes.”
Trade between these two countries topped $50 billion in the last financial year, the article by China correspondent Rowan Callick said, and nearly half of that amount came from the sale of resources from Australian mines.
“This dictates,” Callick wrote, the need to pay as much attention “to pronouncements from Zhongnanhai, the Chinese leaders’ citadel next to the Forbidden City, as from the Federal Reserve in Washington.”The importance of these pronouncements is heightened by the fact that Read the rest of this entry »