The Deal Is Simple. Australia Gets Money, China Gets Australia

For example: "Abuja — The Chinese government has concluded arrangements to spend about $50 billion on development of infrastructure in Nigeria through SINOSURE, the Export Credit Guarantee Agency of China." http://allafrica.com/stories/200803310705.html

"Of some 900 projects China built in Africa, more than half are aimed at improving local people's livelihoods." http://www.china.org.cn/opinion/2010-07/04/content_20416315....

Yes, that's my view too.

I don't think it's possible to hedge against the collapse of China. The effects are just so unpredictable.

For example, the traditional hedge in times of crisis is to move money into some kind of physical reserve, eg gold. Increasingly people try and hedge at a macro level by buying into gold producing companies instead of the physical object itself. Ironically, that would mean increased demand for Australia's Gold companies - so money might be reallocated from Australian iron ore companies like BHP Billion & Rio Tinto to Australian gold mining companies like umm..... BHP Billion & Rio Tinto.

Now I'm not saying this would happen - just making the point that it's difficult to predict exactly what would occur.

Couple of quick points for anyone tempted to make the move: As an employee you get to interact with some pretty amazing tech, but most of it is created by other firms. Direct employees typically end up operating, maintaining and fixing things when they break. It's a great place to get hands on experience solving problems under time pressure. If you want to work heavily in the code base of automated robots/ trucks / trains, find a firm that does the contracting work to work for.

Secondly, don't do it just for the money, the job becomes your life. The article wasn't really about employee benefits but they did mention a salary without saying exactly what it was for.

Michael, after 35 years earns 145,000 p.a. including superannuation.A typical truck driver on a FIFO (fly in fly out) roster will fly up to the mine and work 7 12.5 hour day shifts, followed by 7 12.5 hour night shifts, and then fly back to the city to recover for a week (6 1/2 days). This is repeated about 17 times a year.

14days * 12.5hour shift * 17 stints = 2975 hours. $145, 000 / 2975 = approx AU$48 dollars per hour, including super. For that 20 year old on $92,000 it works out about $31 an hour, assuming the same roster. getting that job is not exactly easy either. The money is not bad, especially since you have nowhere to spend it on while at the mine, but the guys who do this long term have it in their blood and live to work at the mine.

Your social and dating life ( if you have one at all) gets fairly messed up on that roster, and fatigue from night shift can get to you after awhile.

Fun Fact: The mines tend to prefer female truck drivers as they are more gentle on the equipment.

They are building in huge volumes, but they have a huge volume of people. There is a middle class developing. Check out Hans Rosling's talks about it.

There may be a temporary bubble in the stock market, but China is undergoing an incredible shift towards becoming North American in every way. Beijing is the best example of this - the entire city has been bulldozed and redeveloped in a North American big box way. Shanghai is even further 'ahead'.

Traditionally Chinese have been very conservative with spending, preventing quick economic growth. Credit cards are almost non-existent. You pre-pay your bills, even electricity! But for some reason - perhaps the Internets media influence, perhaps the one child policy, people are now spending money quickly. Starbucks is extremely popular and more expensive than in Toronto, NYC or SF! For the price of a coffee you could easily get a great meal with a few drinks, yet coffee shops are filled.

If all of it is a bubble - it is so firmly entrenched at ground level that the momentum of this bubble will burst through and last for decades. New industries are developing rapidly. The insurance industry was almost non-existent a decade ago, and is growing quickly in different ways there.

One thing is part of what is fuels the growth is international companies spending a lot of money trying to establish new business in China. These companies are risking money and bringing expertise into a really unknown market and often losing money. China in the end benefits as they just sit their with their vast market and allow foreign companies to try to create new industries. If anything starts doing really well, the government could always regulate that industry and take it over themselves.

I don't see anything stopping both China and India both developing a large middle class. That will snowball growth for decades. Premium brands will likely dominate - these folks want iPhones and Mercedes.

I think this Australian iron ore example is just the beginning of the scale at which we will see commodities shifting to China. I expect timber to happen at an enormous scale as their foresting practices seem quite unsustainable.