Let’s start off the week with a potential energy alliance between Russian giant Gazprom and an LNG trinity of Woodside (ASX:WPL), BHP (ASX:BHP), and Santos (ASX:STO). “OAO Gazprom, Russia's natural-gas export monopoly, agreed to start negotiations with energy companies in Australia on potential cooperation in production and supply of liquefied natural gas,” reports Bloomberg.
The Russians are coming, along with the Chinese. Is there enough LNG, iron ore and coal in Australia to satisfy this massive demand?
If the S&P ASX/200 dives today in sympathy with Friday’s wreteched jobs report from America, remember what Hu Jintao told a small crowd in the Grand Ballroom of the Sofitel Wentworth last week in Sydney. “Australia has rich resources, a developed economy and advanced technologies, whereas China has a large population, a huge market, and tremendous potential for development.”
In one quiet sentence, Hu perfectly stated why China matters far more to Australia’s economy than America. He also reminds us that to focus on the negative housing-led recession that will soon hit America is to miss the much larger historical story—the emergence of China and its 1.2 billion people into a market economy that eats up resources.
It’s not that America doesn’t matter to the Aussie economy or to Aussie exporters. It’s just that China matters so much more. China’s impact on Australia’s economy grows day by day.
China is now Australia’s largest trading partner. And if the countries aren’t fast friends yet, just wait until that Mandarin-talking Kevin Rudd gets in office. It’s a frienship with obvious economic benefits for both sides, including benefits for Aussie investors.
Dan Denning
The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by JDRCRASH on 11 September 2007:
This is certainly childish of China to say.
He needs to focus on his OWN economy.
If he's been looking closely at it, he would know that China has slowed as well at times during the Dow Jones Industrial Average plunges that have happened lately..
Pingback by Lemon « To Build Solar Panel on 4 October 2011:
[...] DR also has a report on Hu Jintao explaining why China is more important than the US to Australia“. As a trading partner this is true, but foreign trade isn’t the only measure of [...]