I really like your work. I’m a regular follower. With respect, in this piece i think you miss the mark.
Nations export so they can acquire the FX needed to import all the stuff they can’t make themselves. As Australia’s manufacturing sector has dwindled to a mere fraction of its post WW2 peak, the nation has become overly reliant on imports, all of which must be paid for with currencies other than its own.
This has been possible only because the China boom has made the stuff we dig up from the ground much more valuable in terms of price and quantity.
When China eventually rebalances its economy, and buys much less iron ore as a consequence, the question becomes: how does Australia earn the FX its needs to keep importing what it needs?
While it would be nice to think that coal and gas exports might take up the slack, that seems unrealistic in the age of rapid climate change.
I’m old enough to remember when Peter Costello was treasurer. On his watch the AUD traded at 40cents on the USD (which from memory was just before China switched the dial on its economy past 11). I would expect to see the AUD sail past that level in due course. I wonder how high interest rates will be need to be to keep the AUD above that level. It’s gonna get really ugly in mortgageland.
All this is to say that there is another deep dive story waiting for you to get into.
Great article and thanks for aggregating all this information in one place.
Your most welcome, I'm glad it proved helpful.
Great to have the position clarified. Thanks very much.
Let me recommend this: https://www.gingerriver.com/p/full-text-chinas-plan-to-make-fujian
An insight into a different way of doing things to what we are told to expect from a totalitarian regime.
Hi Tariq
I really like your work. I’m a regular follower. With respect, in this piece i think you miss the mark.
Nations export so they can acquire the FX needed to import all the stuff they can’t make themselves. As Australia’s manufacturing sector has dwindled to a mere fraction of its post WW2 peak, the nation has become overly reliant on imports, all of which must be paid for with currencies other than its own.
This has been possible only because the China boom has made the stuff we dig up from the ground much more valuable in terms of price and quantity.
When China eventually rebalances its economy, and buys much less iron ore as a consequence, the question becomes: how does Australia earn the FX its needs to keep importing what it needs?
While it would be nice to think that coal and gas exports might take up the slack, that seems unrealistic in the age of rapid climate change.
I’m old enough to remember when Peter Costello was treasurer. On his watch the AUD traded at 40cents on the USD (which from memory was just before China switched the dial on its economy past 11). I would expect to see the AUD sail past that level in due course. I wonder how high interest rates will be need to be to keep the AUD above that level. It’s gonna get really ugly in mortgageland.
All this is to say that there is another deep dive story waiting for you to get into.