As Goes China, So Goes The World And Definitely Australia

Tyler Durden's picture


While China depends on only one nation for 15% or more of its exports (US 17.3%), Bloomberg's Michael McDonough notes that an incredible 35 nations depend of China for at least 15% of the exports; up from just 4 in 2001. Most are emerging markets or major commodity producers with the shift being driven by China's demand for raw materials, fueled by its investment-led growth model and the stimulus package following the global financial crisis. This gross dependence leaves the world's economy increasingly susceptible to shifts in the Chinese business cycle - most notably Australia which relies on China for a massive 30% of its export demand. This is almost double the next largest developed nation of Japan (which relies on China for 18.5% of its exports) though tensions between the two nations has led to an almost 10% decline in Chinese imports of Japanese goods since September. As we have noted, China has become a key source of FDI in Africa in recent years and 12 of the 20 most-China-dependent economies are from that continent; but as China attempts to transition from investment toward consumption, demand for commodities may slow and downside risk grows for these dependent commodity-producing nations.




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Tue, 02/26/2013 - 19:19 | 3279685 Cult_of_Reason
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Also, as goes the US so goes China and Australia; and  US recession is on the cards for Q1/Q2.

~$275 billion worth of economic drag is already in the pipeline for 2013 without even Obamaquester (~$320B drag with Obamaquester):

• ~$175B direct tax and payroll tax increases

• ~$100B lost disposable income secondary to higher gas prices

• ~$44B in spending cuts mandated by Obamaquester

Tue, 02/26/2013 - 19:25 | 3279722 MrX
MrX's picture

As goes Earth, so go the rest of the planets:

Tue, 02/26/2013 - 19:27 | 3279727 UnpatrioticHoarder
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Australia is the 2nd-largest gold producer. And a top 5 silver producer. We'll be fine

Tue, 02/26/2013 - 19:38 | 3279756 McMolotov
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Sounds like you're in need of "liberation." Expect a coalition of the willing to bring you some democracy shortly.

Tue, 02/26/2013 - 22:08 | 3280262 fudge
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Australia is screwed, only the sheep don't know it yet.


Wed, 02/27/2013 - 00:07 | 3280712 Schmuck Raker
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You sure you're not talking about New Zealand?

Wed, 02/27/2013 - 02:40 | 3280934 Rogue Trooper
Rogue Trooper's picture

Steady! Let's settle this with a real bloody blokes game we call 'Bull Rush', bearfoot of course and sorry none of those nancy boy helmets and armour you yanks play with in that rather complicated game called 'NFL'.

You name the field! I'll bring all the Trevs and few Maori fellas....

I offer as the prize a pure-bread 'Romney' affectionatley called Lamb Chop to the winning team for the after game party out in the cow shed.... but don't tell the kids OK cause they have nursed her since last years lambing season. But she's getting on and well the Freezers a bit empty.

Wed, 02/27/2013 - 05:43 | 3281075 Aussiekiwi
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Wow! Rogue trooper, does that bring back fond memories of my early life....feeling homesick now.

Tue, 02/26/2013 - 19:26 | 3279731 Mark Carney
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And the Aussie index says "Sowhat?mate!"


Looking just like aapl did as it roared to $700

Tue, 02/26/2013 - 22:17 | 3280306 Buck Johnson
Buck Johnson's picture

Your dead on, they wouldn't be trying to find blame on people if it wasn't a problem.  They know this is going to hurt and are getting ready to blame each other.

Tue, 02/26/2013 - 19:33 | 3279688 mjorden
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Are there any statistics to show the breakdown of China's GDP.  In reference to actual productivity growth ... Can't find it, but saw some stats yesterday that shows the productivity component of GDP is in a defenitive downtrend over the past few decades. 

Tue, 02/26/2013 - 19:17 | 3279695 VonManstein
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So China's reliance on "advanced economies" is declining. Which is good for them bad for you

Tue, 02/26/2013 - 19:22 | 3279714 lolmao500
lolmao500's picture

Don't worry, Australia can save itself with their massive exports of vegemite!!

Tue, 02/26/2013 - 20:17 | 3279888 kaiserhoff
kaiserhoff's picture

A lit-tle Roo meat nevah hut no one, Mayte.

Tue, 02/26/2013 - 19:24 | 3279723 UnpatrioticHoarder
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Australia is the 2nd-largest gold producer and a top 5 silver producer. Our arses will be saved once again.

Tue, 02/26/2013 - 19:35 | 3279744 McMolotov
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Or you'll be the unfortunate victims of a "peacekeeping" mission.

Tue, 02/26/2013 - 19:36 | 3279747 gutfeeling
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The way Australia is run frustrates the hell out of me. We have EVERYTHING we need - water (despite the interior being dry there is plenty of it for everyone here), food, minerals, space - and yet we STILL run deficits!! I mean WTF? We should have a SURPLUS of money!!! I can only blame our politicians (Labor, mostly) with their over-bloated agencies and public service trying to buy votes, and the politicians retiring on their AUS$110K tax-free lifetime pensions plus free air travel plus fee train travel plus plus... bastards.

Tue, 02/26/2013 - 20:16 | 3279881 css1971
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How could there be bonds without deficits?

Tue, 02/26/2013 - 20:22 | 3279907 Surrealist
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Oooooooh  you won't like me then. I'm a PS from Canberra sitting around the office all day reading these forums. Hehehehehe. Sorry chump!  

Tue, 02/26/2013 - 20:29 | 3279937 LawsofPhysics
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Governments are people, people are greedy, absolute power corrupts absolutely.  If they increase your taxes and you are stupid enough to pay the taxes, why wouldn't your observation be the obvious outcome?

Tue, 02/26/2013 - 21:06 | 3280056 Never One Roach
Never One Roach's picture

The Australian Housing Bubble is incredible. A place I looked at in 2000 for $265k (which I thought was too expensive then) just sold for $863k. I cannot believe that situation can continue for long even if China does not slow down. Wages have risen but not as fast as housing and food. Anyone interested in a good laugh check out prices fo tiny condos on or near Darling Harbor...they are outrageous! Also read the recent annual survey of the most 'unaffordable place to live.' Australia has at least two on that list. ( I think they were Sydney and Melbourne).


Doesn't make sense.

Tue, 02/26/2013 - 21:39 | 3280157 TwoShortPlanks
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Make no mistake, the epicentre of any Australian implosion bomb will be.....Perth!

Of all the cities in Australia, Perth is the place which relies upon China the most. The commodity boom fed the greatest realestate bubble in the southern hemisphere. Wages are bloated, living standards are the highest there, and, egos to match. Most of the Pubs are gone, replaced with Wine Bars....nuff said.

Remember what I wrote several times before. The State flag of W.A. has a dirty great Black Swan upon it. Irony.

Wed, 02/27/2013 - 00:24 | 3280753 Never One Roach
Never One Roach's picture

True dat, Two Shorts, I was there several times in the 1990's before all this silliness began and really enjoyed Perth back then; very down to earth, so to speak.

It gradually changed with the Global Bubble formation and China's rise esp after the PRCs massive stimulus.... changed into what you bars, "Asian Fusion" food instead of Chinese take-a-way, seriously overpriced condos and houses, etc. not as much fun anymore imo.

Wed, 02/27/2013 - 03:46 | 3280977 LMLP
LMLP's picture

Indeed Two Shorts..... though organic growth from the two biggest populations of China and India let alone the rest of Asia is hardly going to go away soon (4.2billion people in Asia Pacfic! whats developing and whats developed starting not to matter....

You haven't seen rich people till you've seen rich Chinese, Indian,Indonesians...etcetc..... All looking for good clean food, saftey and healthy environment for their kids...Hello Australia.....same time zone, hello Perth!

Australia's about to see how many!!

Q is how to tap that flow?




Wed, 02/27/2013 - 01:03 | 3280818 intj87
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Yeah, I'm in Alberta....
We have 5B defecit with these prices...

Wed, 02/27/2013 - 01:35 | 3280869 MaxThrust
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That's why I wont live there. The thought of all that waisted tax money would drive me mad.

Just turn out the lights when the last skinny shella leaves, shouldn't be long now.


Tue, 02/26/2013 - 19:49 | 3279791 jimmyjames
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Australia is the 2nd-largest gold producer and a top 5 silver producer. Our arses will be saved once again.


You missed uranium-China's coal fired electricity is biting them in the ass with pollution-Japan has no other choice than a return to nuclear as NG for them is through the roof-

Nuclear is the most hated power source on the planet right now and so that almost gaurantees it's where we'll go--long term bullish uranium miners-which have been looking perky the last while-

Tue, 02/26/2013 - 19:32 | 3279736 Kirk2NCC1701
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Short story in 7 chapters:  Ch.1-4: China imports mostly food and natural resources, but less and less of 'value-add' goods.   Ch.5-6: The countries on the list that export food & resources have a steady, long-term customer.   Ch.7: The 'value-add' countries do not have a steady, long-term customer.  The End.

Tue, 02/26/2013 - 19:34 | 3279742 magpie
magpie's picture

'Please do not sell sterling while we hyperinflate' rounds up most of these articles quite well.

Tue, 02/26/2013 - 19:33 | 3279738 magpie
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That's ok, i was thinking more along the lines of ZAR or NZD

Wed, 02/27/2013 - 08:08 | 3281157 groundedkiwi
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NZ has just declared a drought in Northland and the rest of the country is just a few days away from being in official drought. dairying is going to be hurting.

Tue, 02/26/2013 - 19:41 | 3279764 q99x2
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The NWO could use Australia as penal colony for the world. It worked once.

Tue, 02/26/2013 - 20:23 | 3279913 RideTheWalrus
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Randy Newman - Political Science - YouTube

No one likes us-I don't know why
We may not be perfect, but heaven knows we try
But all around, even our old friends put us down
Let's drop the big one and see what happens

We give them money-but are they grateful?
No, they're spiteful and they're hateful
They don't respect us-so let's surprise them
We'll drop the big one and pulverize them

Asia's crowded and Europe's too old
Africa is far too hot
And Canada's too cold
And South America stole our name
Let's drop the big one
There'll be no one left to blame us

We'll save Australia
Don't wanna hurt no kangaroo
We'll build an All American amusement park there
They got surfin', too

Boom goes London and boom Paris
More room for you and more room for me
And every city the whole world round
Will just be another American town
Oh, how peaceful it will be
We'll set everybody free
You'll wear a Japanese kimono babe
And there'll be Italian shoes for me

They all hate us anyhow
So let's drop the big one now
Let's drop the big one now

Tue, 02/26/2013 - 19:42 | 3279769 Squid-puppets a...
Squid-puppets a-go-go's picture

and australia has the worlds only un-popped housing bubble (aside from hong kong)....

Tue, 02/26/2013 - 20:00 | 3279823 ForTheWorld
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I wouldn't say unpopped. There's a small, slow leak in most places that aren't Sydney. There's properties on the market for 3 to 4 months in areas that have been high demand due to mining. You don't hear about that in the MSM though - just when there's price increases in Sydney.

However, we'll just dig more holes and keep it going as long as possible.

Tue, 02/26/2013 - 20:37 | 3279964 sudzee
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Include Canada.

Tue, 02/26/2013 - 20:23 | 3279912 Clowns on Acid
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Orly - can only say that I didn't know that ths article was coming out...

Tue, 02/26/2013 - 23:33 | 3280604 Orly
Orly's picture

Me, either.  But that doesn't change what Stevens said the other day, that China's economy is getting better.

Also what OpenThePodBayDoorsHAL posted on Bruce's thread earlier:

"Less than a third of the resources Aussie sells abroad is iron ore, the rest is things like coal which the power plants of Asia will never stop needing, plus things like uranium, Asia is building 48 NEW nuke plants in the next five years. And of course gold. And Aussie's trade partner China is 30% of her trade, but even Japan is 22% trade with China, so a real China slowdown lowers them as well. Yes the wedge pattern means a bigger move is coming, my guess is that fund flows trump trade flows and AUD gets weaker. Which incidentally will boost Aussie's #2 industry, tourism. You should see the busloads of Chinese tourists, trying to look cool with their new clothes and bags and stuff but obviously just 1/2 generation out of the dirt village. The Lucky Country!"


My bold.

I fail to see what's changed.


Tue, 02/26/2013 - 20:56 | 3280034 MommyDearest
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Australia is going nowhere but up.. China is going to need plenty of commodity filled bullets and bombs to drop on their Japanese neighbours shortly.

Tue, 02/26/2013 - 20:57 | 3280035 MommyDearest
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Australia is going nowhere but up.. China is going to need plenty of commodity-filled bullets and bombs to drop on their Japanese neighbours shortly.

Tue, 02/26/2013 - 21:32 | 3280115 Paracelsus
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                                                                                                                Kissinger flies into Jakarta.  Nudge,nudge.Wink,wink.....  Kissinger flies out of jakarta.

The Indonesians move into the former Portugese colony of East Timor and begin slaughtering the unarmed population the next day (and killing the journalists it finds at Balibo).

The Indonesians illegally annex this country and people for almost thirty years.

Aussie MP Gareth Evans signs Timor Gap treaty dividing up the oil and gas rights between Australia and Indonesia.

Oh,and this was Muslims slaughtering Christians,by the way.But then forget about it .Everyone else has....

I lived in Oz for twenty years.Great people but the politicians are paid hacks the same as DC or anywhere.

In all fairness the Aussies went back and helped restore the Timorese independence.This is to their lasting credit and honor....


Tue, 02/26/2013 - 22:52 | 3280452 Squid-puppets a...
Squid-puppets a-go-go's picture

Lesson to the east timorese: you are only entitled to your sovereign liberty when your natural resources have in turn been liberated from you

Tue, 02/26/2013 - 21:34 | 3280142 Paracelsus
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Tue, 02/26/2013 - 23:45 | 3280657 Orly
Orly's picture

And take da Zbig witcha!

Tue, 02/26/2013 - 23:21 | 3280566 chump666
chump666's picture

Australia may get a bond down grade by S&P, rumor on wires.  What isn't a rumor is the goverment about to steal millions of dollars from it's people.


Tue, 02/26/2013 - 23:25 | 3280576 Orly
Orly's picture

Hey, Chump.  Why would they downgrade Australian paper?  What has changed?

Tue, 02/26/2013 - 23:30 | 3280597 chump666
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this is all i got:

1.0230 to 1.0218 on S&P headline

You watching the AUD?  A lot of shorts on that trade, usually trades with S&P500 bids and gold.  Not this time.

Tue, 02/26/2013 - 23:43 | 3280620 Orly
Orly's picture

Yeah. I am long already.  I was wondering because Euro is also rising. says lots of US sellers in this area.  I think they get burned on this one.

"Huge selling from the US overnight from 1.0250 down coincided with Bernanke’s testimony to the Senate Banking Committee. And its not like Mr. B really said very much.It seems risk has become a four-letter word again since the Italian election."

Remember that wedge and trading in the upper half?  The pair slid through the upper/lower boundary when Dr. Bernanke was speaking and has been riding the line since at ~1.2245.

I still think it breaks higher.


Tue, 02/26/2013 - 23:50 | 3280670 chump666
chump666's picture

Just think of the poor souls that got burnt awaiting the 90 WMA on the YEN, with the correction that never was - yes i was one of them.


Tue, 02/26/2013 - 23:56 | 3280681 chump666
chump666's picture

"Dr. Bernanke" :)

It could, but watch the 15min when a robot sent it down to 1.020, it's acting squirrelly

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