Down-Under Hypocrites Bet All on China’s Boom

That’s essentially the message Treasurer Wayne Swan is sending about Australia’s odds-defying bet on Chinese growth. The government’s latest budget pledges to deliver the quickest improvement in the nation’s finances on record -- without specifics about how that will happen.

The absence of such detail is telling and can be boiled down to one thing: an even bigger gamble on China’s 10 percent growth and its voracious appetite for Australia’s resources. It’s risky to so fully hitch the hopes of 23 million people to a single nation that’s still developing.
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Of course, if a critical mass of Australians has reservations about something, lawmakers must listen. And listen, they did. Yet arguments for quashing the takeover -- deterring investment into Australia, for example -- were tenuous. Everyone knows Australia’s resource sectors are booming and those who want a piece of it won’t care who runs ASX.

The real colonization is arguably taking place on the ground -- or, more to the point, beneath it -- in Western Australia. China’s voracious appetite for raw materials to fuel its rise is at record levels and set to continue rising. It’s leading to bubbles in the 13th biggest economy.

Press reports are full of tales of 24-year-old miners with no college degree making more than the Federal Reserve chairman’s annual $199,700 salary.
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Australia is flirting with “Dutch disease,” whereby financial benefits of a resource boom lead to a hollowing out of other sectors. The worry is that Australia becomes all too happy to be a mining site for China and takes its focus off a more diverse economic future.
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Update: Australia's Dutch Disease diagnosis
The term was coined in 1977 by The Economist to describe the decline of the Netherland’s manufacturing sector after the discovery of a large natural gas field in 1959. But our version of the 'Dutch Disease' is even more serious because it may have infected the banking system.