China demand for resources to rise
China will need large quantities of Australian raw materials as its industrialisation and urbanisation race ahead, despite concerns about weak global economic conditions, Australian Trade Minister Craig Emerson said on Friday. Emerson also hinted that a fall in the Australian dollar amid the volatility that has jolted global financial markets for the past week was good, saying its strong currency had hurt manufacturing and exporters.Fresh off a visit to China, the world’s number two economy and Australia’s biggest trade partner, Emerson said he was an optimist about China’s ability to continue to grow strongly even as debt concerns threaten the economies of Europe and the United States.
“There’s no doubt that China’s industrialisation and urbanisation will continue to require very large quantities of Australian raw materials,” he said in an interview on the sidelines of an Asia-Pacific economic ministers’ meeting in Indonesia.
“We’ll have continued demand and rising demand (from China) for basic raw materials, such as minerals and energy, and then to complement that a growing demand for services in particular.”
China’s unbridled hunger for raw materials created a commodity boom and a step-change for the market in the past seven years, with copper rising from around $2,500 to a series of record highs above $10,000 a tonne , only briefly interrupted by the global financial crisis. Iron ore prices have leapt to almost $200 a tonne from $32 in 2004.
Companies are betting big on China’s continued demand for resources, too. Rio Tinto , Xstrata , Nyrstar and Noble Group in June announced plans to merge or expand output or capacity.
Asked about the impact of the global economic trouble on China, Emerson, who visited China’s fast-developing western region, said he was an optimist. But some economist worry about a hard landing for China, grappling with its highest inflation in three years, which would send ripples around the world.
FIRM AUSTRALIAN DOLLAR HURTS
At home, the Australian dollar has weakened in recent weeks, coming off a high of around $1.10. “A high dollar has been hurting our manufactured goods and our exports more generally,” Emerson said when asked about the fall.
“What we need to do is build the right fundamentals and that’s what we’ve been doing with fiscal consolidation, with microeconomic reform, with investing in skills, with investing in infrastructure. Governments can do that. Governments don’t set the exchange rate,” he said. He declined to comment on what level he would consider reasonable for the dollar. Emerson, who chairs the Cairns group of agricultural exporters, said he hoped U.S. policymakers would prioritise cutting farm subsidies as part of efforts to trim the national deficit.
“We’ve argued for the U.S. and Europe to cut farm subsidies since I was a little boy and here’s another opportunity,” he said.
“There’s no doubt that the administration and the congress will be looking for areas of expending that they could cut. It’s an opportunity to do this, to reduce farm subsidies which will be good for global food security.”
“There’s no doubt that China’s industrialisation and urbanisation will continue to require very large quantities of Australian raw materials,” he said in an interview on the sidelines of an Asia-Pacific economic ministers’ meeting in Indonesia.
“We’ll have continued demand and rising demand (from China) for basic raw materials, such as minerals and energy, and then to complement that a growing demand for services in particular.”
China’s unbridled hunger for raw materials created a commodity boom and a step-change for the market in the past seven years, with copper rising from around $2,500 to a series of record highs above $10,000 a tonne , only briefly interrupted by the global financial crisis. Iron ore prices have leapt to almost $200 a tonne from $32 in 2004.
Companies are betting big on China’s continued demand for resources, too. Rio Tinto , Xstrata , Nyrstar and Noble Group in June announced plans to merge or expand output or capacity.
Asked about the impact of the global economic trouble on China, Emerson, who visited China’s fast-developing western region, said he was an optimist. But some economist worry about a hard landing for China, grappling with its highest inflation in three years, which would send ripples around the world.
FIRM AUSTRALIAN DOLLAR HURTS
At home, the Australian dollar has weakened in recent weeks, coming off a high of around $1.10. “A high dollar has been hurting our manufactured goods and our exports more generally,” Emerson said when asked about the fall.
“What we need to do is build the right fundamentals and that’s what we’ve been doing with fiscal consolidation, with microeconomic reform, with investing in skills, with investing in infrastructure. Governments can do that. Governments don’t set the exchange rate,” he said. He declined to comment on what level he would consider reasonable for the dollar. Emerson, who chairs the Cairns group of agricultural exporters, said he hoped U.S. policymakers would prioritise cutting farm subsidies as part of efforts to trim the national deficit.
“We’ve argued for the U.S. and Europe to cut farm subsidies since I was a little boy and here’s another opportunity,” he said.
“There’s no doubt that the administration and the congress will be looking for areas of expending that they could cut. It’s an opportunity to do this, to reduce farm subsidies which will be good for global food security.”
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