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.
The Daily Reckoning Australia