Kobus van der Wath is the Founder and Group Managing
Director of The Beijing Axis, an international advisory and
procurement firm facilitating Australian and Chinese entities
to engage effectively in four principal areas – strategy and
management consulting, capital advisory, commodity trading,
and procurement and supply chain managed services. Here,
Kobus presents a thoughtful analysis of the increasingly
complex Sino-Australian relationship within the context of
a slowing global economy, and he completes his fascinating
assessment by discussing how Australian players might
leverage inherent prospects by adapting to Chinese
diversification for their long-term interests.
FORWARDMOMENTUM
Kobus van der Wath
Founder and Group Managing Director
The Beijing Axis
Taking a long-term view of Australia-China relations
China’s phenomenal growth, particularly over the last decade, has
fuelled the commodities boom the world over. Blessed with natural
resources, Australia was somewhat shielded from the global
financial crisis based on the country’s ever-rising commodities
exports to China. However, changes mostly beyond the control
of China’s leadership have cast a grey cloud over the mining
industry. While growth in the world’s second-largest economy
has stabilised in 2013, in line with the expectations of China’s
leadership, concerns have been raised about the downward trend
in Chinese growth.
The resources sector contributes about one-fifth of Australia’s
national output – double its share from a decade ago. Australia’s
commodities exports to China have grown from under
A$9 billion in 2001 to in excess of A$70 billion in 2012. As the
single largest commodities supplier to China, these developments
understandably raise significant concerns not only for the
Australian mining industry, but for the Australian economy
as a whole.
Crucial for Australia’s future is the evolution of China’s
economy – from a capital and commodity-intensive growth model
led by the state sector, to a consumption-driven model with greater
private industry participation. Likewise, the fallout from a dip in
China’s growth is often greatly exaggerated. China will continue to
urbanise, upgrade its infrastructure assets and remain the world’s
largest exporter for the foreseeable future – all of which will
require commodity imports to offset domestic resource shortages.
With most long-term predictions pointing to slower yet steadier
growth, Australia is well positioned to remain China’s preferred
commodities supplier over the long run.
Adjusting operations
Mining companies all around the world have felt the pinch in
the latter half of 2012 and 2013, with the majority of commodity
prices slipping whereas costs continue to increase. This is mostly
based on varying Chinese demand in crucial industries such as
iron ore and copper – with the latter experiencing its worst decline
Tug Boat, Simon Phelps Photography
Minesite 2013
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