Wednesday, 8 June 2011

The Australian economy and our growing reliance on China

China's growing demand for Australian natural resources (iron ore, copper, and other resources dug up from Port Hedland's wasteland) may have very well been the reason Australia did not fall into recession during the 2008 GFC. Having consumed 37% of Australia's mineral exports over the past fiscal year (up from 5% a decade earlier), China's almost insatiable demand continues to drive the Australian economy. But are we setting ourselves up for vulnerability by our growing dependence? Is Julia Gillard allowing too much investment from China (whilst delicately tempting to charm Washington with pledges of friendship)?

Such exponential growth has attracted a surge of investment in the sector. Having already received $40 billion in investment from mining companies during 2010 (nearly triple the amount from 2005), a further $140 billion worth of mining and energy projects are currently underway. Australia's biggest investment boom since the 1850s gold rush, as boasted by Australian Treasurer Wayne Swan.

But how can an aspiring professional like myself be apart of this growth? Infact, individuals of any industry, blue or white collar? Western Australia, the state that accounts for two-thirds of Australia's exports to China, which has resulted in faster growth and lower unemployment than Australia as a country. So while the world's most powerful nation struggled to find jobs for millions of unemployed, WA is worried about a labour shortage! With the mining sector set to produce 85,000 jobs over the next 18 months, other industries will also be beneficiaries to this growth with the mining boom set to create jobs for waitresses, cabdrivers and hotel clerks.

But are Austrlaians becoming too dependant on Chinese demand? Any economy that becomes too dependant on any one sector takes too big a risk. Are we losing control of our natural wealth to China? However you decide to look at it, Australia is succumbing to the realities of the East - thats where the growth is!

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