spartacus

COME ON YOU OZZIE!!

GarryP

And that's the rub. The value of the dollar is built on the hole in the ground, and the export of the stuff from that hole to China. If China goes south, so does the exchange rate.

Most people think its going to be a matter of when, not if, China suffers a reverse.

Amazulu

Agree. the reality is that the centre of the world is moving from the Atlantic to Asia - whether people in the UK like it or not. Australia is well placed to be part of this shift - and already is in reality.

Fluid36

Thanks for the point of view, not sure if I agree though. A strong dollar is obviously not in the best interests of these exporters you talk about and when other countries such as the UK start to raise interest rates to curb off inflation their currencies will strengthen.

Weebie

Even if China went South Which I personally doubt it will (been there many times) We have other buyers in the Pipeline such as India Taiwan and more recently Russia have put their hand up.

Weebie

Australia's economy doesn't rely on exports as much as other countries. We tax foreigners enough.

bcworld

I thought 'the boom' was all about exports!?

Fluid36

You just told me Australia's economy is almost entirely reliant on exports.

ozzieeagle

Japan is also, unfortunately for them, going to be in the market for plenty of natural resources over the next few years.

People also tend to overlook the Korea's they are bound to unify over the next generation and become a consumer powerhouse as well. Imagine how much building will go on in North Korea once it does fall.

Lets mention India again.... then there's the SE Asian Countries of Vietnam, Laos, Thailand and Cambodia who are bound to have some kind of boom with this economic activity happening around them. Then add another 300 million+ people wanting to improve their lives in Malaysia and Indonesia.

If China does slow, the economic shift will probably just flow to another part of this region.

Australias biggest concern to it's growth is probably Brazil and their abundance of Natural resources. Luckily they are stymied by Distance.

Weebie

Yeah but Ore is completely different from an export point of view. There are realistically only two places where you can get it Australia and Brazil although a few african countries in the pipeline but realistically still going to cost large amounts of money to get it out there.

These emerging powers need steel in order to grow so they'll pay the going rate. It's not the same exporting some product which in many cases would require an foreign workforce to do the job and then the exhcange basically killing it off, Ore is completely different which is shown by are high demand from our very high exhchange rate.

bcworld

What about China?

Weebie

The ore is not comparable.

Amazulu

Very good point - look how much the Germans had to spend to sort out East Germany when they unified, and East Germany was in much better shape than North Korea is.

South Korea is a major, and growing, consumer of Australian LNG

Fluid36

I didn't realise North Korea was about to fall, hey wait a minute, it's not and I have no idea why you would think that it is any time soon.

GarryP

All of that is fine. However, as and when China suffers a back step there are two points:

1. The new Chinese middle class will quickly turn ugly. The only reason the democracy bug went away was everyone was making money. They all realise that if that goes away, the government will have to crack down hard, and fast. In other words, it will spiral down quite quickly.
2. Timescale wise, the exchange rate will react very quickly - whereas growth in Korea et al, to fill the hole left, will take months/years. Between the two epochs, the exchange rate will shift significantly.

Not saying Europe is in a good place, and with a long term view Australia is well placed, however short and medium term circumstances will be turbulent,