Also, is China aging such a negative, as it the smaller the workforce, the better for international competitiveness. I know that Australia does not even compete on an international scale, but more competition (larger from India and Russia) would allow for prices to become even cheaper.
Also the TOT is increasing which is inflationary, get that through Wayne Swann's narrow minded head! Get him to define it first! haha

Article is Great overall

Imagine Pilot Officer Swann manoeuvring a 40 year old F111-C onto a short final with his eyes shifting between the airspeed indicator, the rate of decent indicator and the runway keys – His landing gear is down and locked but he has forgotten to notice a small tire pressure indicator beeping and flashing red. Apparently the tires on the left hand side (akin to mining, resources etc.) are over inflated to bursting point. The Tyres on the right hand side (manufacturing, finance, tourism and drought impacted agriculture) have deflated. Not to worry the average pressure of the tyres is SPOT ON!

Makes for an interesting landing but not a soft one.

What I want to ask is, how does an improving "Terms of Trade" make inflation in general prices worse? That is, the degree to which it boosts spending/"aggregate demand" in an economy, doesn't it also boost the "aggregate supply", so that price levels aren't affected like they would be if there was a boost in spending inspired only by credit?

Thanks in advance...

If the import capital equipment values were removed from the figures (EU / US origin equipment of low volume, high value) it would give a better view of the base from which to make a better short term forcast for net import price change effects.

The effect of the Olympics on Chinese resource consumption will be proved larger than is credited (like our 2001/2 hangover). Chinese GDP growth has been extraordinary but their GDP itself is still not driving a domestic economy big enough to resist a significant downturn in export related production.

Recent import price inflation is starting to show the effect of USD weakness (raw materials) & local wage inflation in China adds to this. The incredible production productivity increases that deflated their export prices in the past 10 years appear to be topping out short term (despite their awfull domestic transport & logistics productivity).

My guess is that softer mineral demand will start to feed through and affect our export volumes and prices. Events in Asia tend to move more quickly than the fascinations of Chinese state enterprise planners that seek to out-Japanese the Japanese.