By Dee McLachlan
Is there really enough iron ore sitting in the ports of China to build 13,000 Eiffel Towers? And isn’t iron ore, Australia’s biggest export, the country’s main driver of a trade surplus and GDP growth?
I have, in past articles, commented on manufacturing industries in Australia collapsing, and that we are becoming a nation of tour guides and baristas. The main business and wealth earning industry, it seems, is sitting on property — and waiting for asset prices to rise.
I have little understanding of economics and had never heard of something called the Economic Complexity Index. Apparently this measure ranks countries based upon their economic diversity — the diversity relating to how many different products a country can produce, versus how many countries are able to make those products.
I was shocked, but not so shocked to learn, that Australia ranks way down at 77th place. Worse than Mauritius, Macedonia, Oman, Moldova, Vietnam, Egypt and Botswana. Worse than Georgia, Kuwait, Colombia, Saudi Arabia, Lebanon and El Salvador. We sit between Kazakhstan and Jamaica, and worse than the Dominican Republic at 74 and Guatemala at 75,
I was sent a link to the Medium the other day — and read it in this article, Australia’s Economy is a House of Cards, by Matt Barie and Craig Tindal. I quote:
“I recently watched the federal treasurer, Scott Morrison, proudly proclaim that Australia was in “surprisingly good shape”. Indeed, Australia has just snatched the world record from the Netherlands, achieving its 104th quarter of growth without a recession, making this achievement the longest streak for any OECD country since 1970.
For over a quarter of a century our economy mostly grew because of dumb luck. Luck because our country is relatively large and abundant in natural resources, resources that have been in huge demand from a close neighbour.
That neighbour is China.
Out of all OECD nations, Australia is the most dependent on China by a huge margin, according to the IMF. Over one third of all merchandise exports from this country go to China- where ‘merchandise exports’ includes all physical products, including the things we dig out of the ground.
As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Unfortunately for Australia, that “lucky” free ride is just about to end.”
I wonder if the authors are really correct when they say “China isn’t as desperate anymore for iron ore,” and that in May 2017, “stockpiles at Chinese ports were at an all time high, with enough to build 13,000 Eiffel Towers”?
The full article is worth a read — but make sure you’re sitting down before you do so.