How sturdy is that rock of Australian earnings growth-Chinese demand? “The rampant Chinese economy that Kevin Rudd and Wayne Swan are confident will help insulate Australia from the worst of the global financial meltdown is starting to falter, with Chinese leaders warning of a ‘most difficult’ year ahead,” report Rowan Callick and Sid Marris in yesterday’s Australian.
“There are uncertainties in international circumstances and the economic environment, and there are new difficulties and contradictions in the domestic economy,” Chinese Premier Wen Jiabao said at a meeting of the State Council last week.
“All the advice that I am receiving is that we are well placed to withstand international turbulence although we are not immune from it,” said Federal Treasurer Wayne Swan.
What an interesting contrast in bureaucratic speak. The use of the word “contradictions” goes all the way back to Marx and his critique of capitalism, that it was rife with “internal contradictions.” These contradictions are resolved through the dialectic, the synthesis of two previously contradictory ideas (the thesis and anti-thesis).
China is probably on the verge of its first crisis of capitalism. So far, it’s produced great wealth, which naturally leads to a skewed distribution of income between those who are newly wealthy (day traders, factory owners, urban dwellers) and those who are not (500 million subsistence farmers uprooted by the transition to an industrial economy).
According to all the advice Wayne Swan is receiving, none of this is a problem, nor does it pose any risk to China’s long-term appetite for Australian resources. Phew. Good thing we don’t have anything to worry about or plan for.
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