Its funny I have never fallen into the China will be Australia's...

Its funny I have never fallen into the China will be Australia's saviour. China is a growth market (a very big market) but it still heavily relies on its exports from manufacturing. So while the rest of the world are not demanding its products it will stifle China. Like it or not the world economy is tied together like most people simply cant fathom.

I remember in early March 2008 when Wayne Swan was about to prepare his first Budget. I watched the high powered economic forecaster and investment adviser Marc Faber scratching his head as our interest rates where going up while every other country was going down. As he said at the time inflation is the least of your problems. This crisis is going to effect Australia just as it will effect China, USA, UK, Europe .... we are all part of the world market.

As he said Oz is a commodities based country and a slowing demand will produce the double wammy of lower commodity prices which means even more hardship. Even in March 2008 when Rudds fools where singing the "China will save us" Faber noted the relative huge declines in Australian share prices and believed that if it hadn't been for BHP and Rio Tinto and some companies with a very heavy weight in the index, the market "would probably" be down below the 50 per cent decline level which was way more than the US at the equivalent time.





The interview tonight on Lateline Business with Marius Kloppers pretty much agrees with how I see commodities. I certainly don't think that China is the economic angel from heaven. It has to be a worldwide fix or else our economy is not going anywhere. Two days ago China said around 20 million rural migrants were now out of work -- more than triple the number announced last month -- in an indication that the slowdown in the world's third-largest economy was intensifying.



MARIUS KLOPPERS: And anywhere in between. I think that we have asked a lot of our investors "What do you think?" And we've said in order for us to have robust demand we need to see the OECD do well and China do well. When do you think the OECD will do better? I haven't had that many answers over the last six months to tell you.

ALI MOORE: You mentioned the OECD, is the point that you're making about China that it's not the saviour many are painting it to be?

MARIUS KLOPPERS: That is probably, you know, an abstract way of putting it. What we are saying is to see a real upside for our particular segment of the industry, all of our consumption, you know, all of our client economies have to do well, and then China provides the plus.

But the OECD has to do well as part of that.

ALI MOORE: China on its own is not enough?

MARIUS KLOPPERS: China on its own is probably not going to be enough.



You can view the whole Kloppers interview here:
http://www.abc.net.au/reslib/200902/r336322_1524482.asx


Or the whole of Lateline business on Iview here:
http://abc.com.au/iview/