Australia`s China reliance worries some

The risks of Australia's dependence on ongoing growth in China will be rammed home
if the Asian superpower's economy falters, analysts warn.
Australia's reliance on China's seemingly insatiable hunger for metals and minerals
was again highlighted in the federal government's budget last week, with growth
forecasts for our major trading partner underpinning the positive domestic outlook.
The Asian superpower's rapid urbanisation has boosted Australian mineral exports in
recent years, giving us the enviable title of the world's only developed country to
dodge the recession.
But there is growing concern Australia may have all of its eggs in one basket amid
the Rudd government's expectations of 10 per cent growth in China this year, against
global growth forecasts of 4.25 per cent.
This compares to China's growth of 8.7 per cent last year and 9.6 per cent in 2008,
when the impact of the global financial crisis was being keenly felt elsewhere.
The federal government has also tipped China's growth to dip to a still-strong 9.5
per cent next year.
However, some economists say that such pace is unsustainable.
CommSec chief equities economist Craig James said recent data from China showed its
economy continued to grow at a firm pace.
But it's showing no signs of accelerating compared with the average pace of the past
year, he says.
"Apart from inflation, Chinese authorities have also got a challenge in keeping the
property sector under control," Mr James said.
"While annual growth of property prices lifted again in April, supply is also
responding.
"Encouragingly, authorities have taken early steps to cool property demand."
Mr James said he's confident authorities in China, a planned economy, will tighten
policy so growth slows "not to a crawl, but a more sustainable growth pace".
Other commentators have raised concerns about materials stockpiling in China as a
sign that its imports may slow, and the fact the now-weakened United States remains
a key market for Chinese manufactured goods.
Particularly worrisome are federal opposition claims Prime Minister Kevin Rudd told
a Perth business function earlier this month that the Chinese economy could implode.
"One person told me that Mr Rudd lectured them on the perils of putting all their
eggs in the China basket, yet that's exactly what Mr Rudd has done with Australia's
budget," Opposition Deputy Leader Julie Bishop said.
Opposition Leader Tony Abbott told media last week that the federal government's
budget depended on China's growth, which "could be choked off either by Mr Rudd's
great big new (mining) tax or alternatively by a change in conditions in our trading
partners, the customers for our resources sector".
The overwhelming majority of commentators, however, say the fundamentals of the
China growth story remain intact.
"There are risks to being so leveraged to a country, but there are significant
opportunities as well," Mr James told AAP.
"Inflation is indeed bubbling up a bit ... but the authorities are on the case this
time."
CMC Markets analyst David Taylor said investors were worried Chinese demand for
metals would fall amid fears of a sovereign debt contagion in Europe.
Such fears were unfounded, Mr Taylor said, as China's economy was probably only
going through a temporary trough.
"Shanghai copper (prices) are down three per cent today so there are definitely some
jitters in the market, but from a long term point of view, I am very much a believer
of the super-cycle in commodities," he said.
"We are going to see ongoing demand for copper, iron ore and all the industrial
commodities for a good 10, 20, 30 years.
"It will give a massive boost to our economy and impact the terms of trade for many
years to come.
"I don't see China faltering soon."