“Rio Tinto is like a dishonourable woman,” read a widely published Xinhua story this weekend. “Once she loved the money in Chinalco’s pocket but she actually did not love the man himself. Now she is breaking faith and kicking down the ladder.”
This definitely sounds like a spurned lover. But what will the revenge be? Let’s hope she doesn’t have a knife. Or a blue water navy. Or an inter-continental ballistic missile.
Alas, for the new capitalists of the Chinese state this is a lesson that capitalism is not a romantic business. It makes for realistic bedfellows, not true love. Chinese deal makers may currently view the Australian resource sector has a harlot or a shameless “lady of the night” that has turned down a helpful offer the minute something more lucrative came around.
But that is assuming Chinalco’s intentions with Rio were always honourable. And that is ignoring the fact that the “white knight” offer, made in Rio’s hour of need, was also extremely favourable to Chinalco, given Rio’s weakness at the time. But let’s not take sides in this lover’s quarrel, shall we?
And let’s not lay blame, either, except, perhaps, with Tom Albanese, who deserves it. We suspect realism will prevail in the future relationship between China and Australia. A “let’s-still-be-friends relationship makes sense for both parties, one of which has resources, the other of which needs them.
Time and necessity heal all wounds. But in the meantime, don’t forget the flowers Mr. Rudd!
By the way, no one should assume that Australia will always have China to fall back on, whether it is for capital in a pinch, or long-term resource demand. China’s apparent economic recovery is “mild” and “unstable” according to a study from The Development and Research Centre of the State Council in Beijing. “Although the economy has bottomed out, it was touching a flat bottom, instead of a V-shaped bottom,” says the Centre’s deputy director Zhang Wenkui.
With our unseemly interest in bond yields lately, we’ve completely neglected the idea that China may not inevitably rise to replace America as the world’s dominant economic power or Empire. Its possible China itself could collapse. More on that subject tomorrow.
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