October 12, 2010

China’s Quiet Australian Invasion

October 11, 2010 | From theTrumpet.com
Economic imperialism in action
The world economic crisis has treated Australia well. While the global economy shrank for the first time since the 1930s, Australia kept growing. Its unemployment remains at a mere 5.1 percent. (In the U.S. it is nearly twice as high: 9.6 percent.) And the Australian government didn’t bail out a single bank.


As former Filipino President Fidel Ramos wrote, “Australia’s continued boom it owes to mineral and energy exports to China.” 

“Australia is about to embark on its biggest mining investment boom since the 1850s Gold Rush,” Australia’s Treasurer Wayne Swan said in speech on October 11 at the New York Stock Exchange. The boom is being driven by China’s voracious appetite for raw materials. 

This China-driven mining boom is the source of Australia’s continued prosperity.
“Our economic relationship with China adds A$3,400 (us$3,350) per annum to every Australian household through exports, imports and foreign investment,” said the chief economist of the government trade organization Austrade, Tim Harcourt

In 2009, nearly one quarter of Australia’s exports went to China. It buys A$22 billion worth of iron ore a year. 

In the year leading up to July 2009, China spent A$42.2 billion on Australian exports, A$3 billion on direct investment in Australian firms and A$4.9 billion in financing other projects. 

The fruits of Australia’s relationship with China appear to be good. Bloomberg Businessweek writes, “The consequences of a A$6.6 billion trade surplus with China are evident on Australia’s streets as much in what is unseen as what is seen: There are no dole lines, no rash of real-estate foreclosures, and little of the social unrest that has followed economic downturns elsewhere.” 

Seventy-three percent of Australians surveyed by think tank Lowy Institute for International Policy said that Chinese-fueled economic growth has been positive. 

But there is a danger. China is a growing imperialist power. In the short term it is trying to extend its control over the South China Sea. The long term puts it in a direct conflict with Australia. 

Last month, the International Monetary Fund (imf) warned the Australian government that Australia is too dependent on China’s demand for its resources. While the imf’s concern is that a cough in China’s economy could give Australia a cold, Beijing has shown in recent months that it will use its economic clout to get its own way. 

In September, China used its economic clout and monopoly on rare earth metals to force Tokyo to surrender in a diplomatic spat. 

China has also tried to push Australia around. At the beginning of this year, Chinese government-owned Chinalco tried to double its stake in Australia’s Rio Tinto. A month later, China sentenced Rio Tinto executive Stern Hu, who was arrested in July of the previous year, to 10 years in prison for espionage. 

“The Stern Hu case is being directed from the highest levels in Chinese politics and there is unlikely to be anything accidental about the timing [of the trial],” wrote Greg Sheridan, foreign editor at the Australian

Sheridan accused China of using the trial to pressure Rio Tinto into making another deal with Chinalco.

Australia’s public is naturally worried about China’s growing influence. In the same poll cited earlier, 57 percent said there was too much Chinese investment in the Australian economy. Forty-six percent said that China would become a military threat within the next 20 years. 

In the 1980s, Australia was just as dependent on Japan. Back then, many worried about the dangers of Japan’s influence. But the current situation is far worse. China is a murky socialist state that has shown itself willing to use economic imperialism to get its own way.

- Expect Australia to Shift East—and Suffer for It