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

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

#61

Post by riffer »

btilly wrote: post #52
mrtron wrote: post #49

Earlier quoted context omitted.

I don't see how China's demand for commodities could be a bubble. 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 be…

The first problem that China has right now is that government policy has made it easier to bring money in than to take it out. This has caused a significant asset bubble. If that asset bubble pops, it will be painful. That's exactly what happened to the Japanese juggernaut that everyone was scared about 20 years ago. The longer term problems are demographic. The one-child policy means that the upcoming generation is…

30 years out we'll be hearing more about India than China

I have that bet on, and in good size

Everything we know about top-down vs. bottom-up design says that China is supposed to appear to be doing better than India, until eventually it suddenly becomes clear that it is not.

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

#62

Post by etherael »

adrianwaj wrote: post #43

The key issue for me here is that Australia's not getting the same infrastructure projects that China's African resource partners are getting (eg roads, schools, hospitals.) Australia's probably getting more money instead. 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 o…

Why would you think that Australia would have the same demand for basic infrastructure that Africa does, considering the relative economic positions of the vendors in each instance?

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

#63

Post by dejb »

brc wrote: post #51
dejb wrote: post #29

Earlier quoted context omitted.

> The tax was beloved by pro-government tax-raising types and lovers of economic theory and hated by pretty much everyone else. From a 'web startup' point of view I can tell you it seemed like a lifeline to have some downward pressure on the aussie dollar (as this tax did) as well as a small decrease in tax rates. As mining heats up it becomes more difficult to operate any other export business because of increased e…

I'm in the same boat as you - the high AUD is killing my profitability - 30% revenue fall in 2 years. However, I don't condone this type of government action just to make my life easier. Continued foreign investment in high risk mining activities is good for the country, and this was going to stop it. If anything was to be done then the state-based mining royalties should have had some component to adjust with the pr…

> I don't condone this type of government action just to make my life easier

It is certainly easy to have one's opinions shaped by personal circumstances. But do you really think that Australia's long term future will be best served by relying on our minerals rather than our minds? It's like the economy is telling us 'this information economy stuff is all rather nice but the best thing you could be doing now is figuring out how to find and extract minerals from the ground'. I don't happen to agree but could you honestly recommend a comp sci degree over metallurgy to a financially ambitious school leaver?

A heavy reliance on minerals and therefore on our relationship with China seems fraught with danger. Politically speaking, mining requires 'stability' where as the information economy seems to require democracy and freedom. All income is not equal.

> Continued foreign investment in high risk mining activities is good for the country, and this was going to stop it.

It seems to me that the value of the minerals is not in danger of disappearing any time soon. So I don't really see the frantic need for us to sell it as soon as it can be economically extracted. Are we really so badly off that we need the money as soon as we can get it? Unemployment is 5%. To me the danger is that are we becoming so addicted to this revenue source that when our dealer stops supplying we won't be able to cope.

> If anything was to be done then the state-based mining royalties should have had some component to adjust with the price of the underlying ore.

You must be from WA :) Seriously though I'm not sure about the best mechanism but I think this is a situation where the pure free market could become a tragedy of the commons.

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

#64

Post by dejb »

brc wrote: post #60
zmmmmm wrote: post #40

Earlier quoted context omitted.

> make hay while the sun shines If only we were actually making some hay, or put some of what we do make in the barn instead of gorging on it. I think a better analogy is "let's party while the champagne is flowing". Instead of long term investments in permanent infrastructure and educating our citizens we are largely just padding out the middle class with spurious welfare benefits. That's almost worse than just thro…

I mostly agree with this. While I don't think we should increase mining profit taxes, I do think some of the mineral wealth should be locked away into a sovereign wealth fund - the type that can't be gotten at by sticky fingered politicians of any persuasion. The wealth fund could be used for apolitical purposes, like education funding (scholarships?), national dual lane freeway construction, large-scale water projec…

Actually wasn't the it called mining 'super' tax becuase it was to fund superannuation? I know there was to be some increase in funding but I'm actually not 100% sure because the govt did such a poor job of selling it.

Anyway I think this may be one of those cases where the XX cents we typically get back from each dollar the govt taxes could be worth it to slow the party down.

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

#65

Post by mrtron »

c1sc0 wrote: post #59
mrtron wrote: post #49

Earlier quoted context omitted.

I don't see how China's demand for commodities could be a bubble. 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 be…

Most of what you are writing was true, like a year ago. Never forget that China develops at internet speeds. Here's an update as far as I can tell. Credit-cards are very much existent right now , to the extent that I know people who got into nasty trouble with them. That's a thing of the last year or so. Overall credit is a lot easier to get now, which makes the real estate market feel pretty bubbly, but there does s…

Credit cards are in existence now, but what percentage of people own one and use it regularly? The credit limits they give you are laughable - like 80$ US. Like everything else you need to prepay to use it.

I think you are discussing the fringe edge of China. Don't forget that there are a billion people there. A few rich folks are starting to get credit cards over the last YEAR. But imagine if 200 million middle class new customers get them this decade.

The difficulty moving money out of the country is an interesting problem. It is no doubt feeding the bubble, as you suggest almost everyone of modest means manages to get a substantial amount of money out of the country regularly.

It is also interesting to see the speed at which China develops. They build entire blocks of condo towers at once. They moved the steel factory of how many hundred thousand workers completely out of the city. Nowhere else has the liberty of wiping the old out and moving forward in the same way they do. It does seem that it does come with the perils of moving too fast and wiping out historical and natural progressions.

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

#66

Post by w00pla2 »

nl wrote: post #19
teyc wrote: post #16

Earlier quoted context omitted.

some drill rigs are semiautonomous, with GPS. The control systems were priced around $120k the last time I looked about 10 years ago. Any HN'ers want to disrupt this? I know some drillers out this way.

They have similar technology for farming, too. If you wanted to disrupt this, I suspect you don't want to make it cheaper (the mining companies have plenty of money), but to do a better job somehow. (Where are you?)

> They have similar technology for farming, too.

This is called "Precision agriculture". Tractors and equipment enabled with this can throw the precise amount of fertilizer/seeds at specific points. Probably quite a hot topic in farming... Go to any farming show and you will see this.

http://en.wikipedia.org/wiki/Precision_agriculture

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

#67

Post by iamelgringo »

mrtron wrote: post #49
jakarta wrote: post #4

It's pretty interesting to see how intertwined China is with Australia. If you ever want to short China, your best bet is to target Australia which already has a bit of a property bubble, mining companies that are dependent on Chinese demand, and a currency that is buoyed by commodity prices. If China is indeed a bubble (at least in the medium-term) Australia is going to experience a world of hurt.

I don't see how China's demand for commodities could be a bubble. 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 be…

re: China Bubble

In building http://Newsley.com, I've been reading a lot about the Chinese economy, and the potential bubble there over the last 9 months.

No hard numbers, I just know this must be true, because my gut tells me it is true. #tongue_in_cheek

My gut tells me that 10% GDP growth year on year is simply not sustainable over the long term for any country. There will be an economic contraction at some point. I'm also very leery of the lack of transparency in the economic numbers that are coming out of China. It's hard to build a capitalistic society without financial transparency. Perhaps China will pull it off, I have my doubts.

And... http://newsley.com/k/Tag/economic-bubble/8167/ http://newsley.com/k/Tag/economy-of-the-peoples-republic-of-...

I'm building results pages for Newsley, before I have the search piece of the site built out. But, as I eat my own dog food, I find these results pages to be rather interesting for drilling down into specific topics.

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

#68

Post by cletus »

Honestly this kind of article annoys me.

It's split across 5 pages (more page views anyone?) and meanders through largely meaningless anecdotes without ever really getting to the point.

The whole stream of anecdotes style of journalism is one I abhor. It's lazy, can easily be abused (you can use anecdotes to prove anything) and is often just cheap theatre to try and humanize something otherwise without substance.

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

#69

Post by adrianwaj »

etherael wrote: post #62
adrianwaj wrote: post #43

The key issue for me here is that Australia's not getting the same infrastructure projects that China's African resource partners are getting (eg roads, schools, hospitals.) Australia's probably getting more money instead. 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 o…

Why would you think that Australia would have the same demand for basic infrastructure that Africa does, considering the relative economic positions of the vendors in each instance?

Unpredictability brings anxiety and hope in equal measure to the 8,000 Aborigines in the Pilbara, who hope their third-world living conditions might be raised by the China boom. Tony Wiltshire, an indigenous mechanic who runs a guild of Aboriginal businesses and tradesmen in the Pilbara, says the mining boom's benefits could sidestep the local population.

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

#70

Post by dejb »

nl wrote: post #24
jakarta wrote: post #18

Earlier quoted context omitted.

Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? India might pick up some of the slack, but I would bet against it. Household debt / disposable income in Australia is 157% versus 133% for the US shortly before the financial crisis. That level of debt combined with ever increasing home prices should create a pretty volatile situa…

Do you realistically expect the US, Japan, or Korea to somehow fill the gap if China suddenly drops its demand for Australian commodities? Probably not, but it depends. If you think the "China bubble" is because of Chinese domestic demand (ie, construction in China) then it will be hard to replace. If you think it is because of Chinese exports then it's possible another country could substitute. Personally I reject t…

> While the asset prices (ie houses) keep increasing that level of debt remains serviceable.

Isn't this just another way of saying that the bubble is fine until it bursts?

You mentioned our increasing population but I thought both of our potential governments where now committed to a 'sustainable Australia' (A.K.A. reduced immigration).

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