China is really, really important to us all on many different levels and is becoming more so. As an example, even at a slower headline growth rate, the additional increment of economic activity in China will still contribute nearly 50 percent of total global growth this year; not taking into account the fact that growth in Australia, Brazil, Africa and other countries is to some extent also driven by China.

Of course China is important to us in Australia – that much is self-evident. But China is also important to, and impactful upon the world.

I wonder whether there is yet a broad and deep appreciation globally of just how important or how impactful China is and will become. My view is that much of the western world’s contemplation of China is anxiety-based, seeing China at best as a strategic competitor and at worst as a hostile, alien and disruptive interloper into the existing world order. Of course, the extent to which the US and Europe have been distressed and distracted since 2008 with the ongoing financial crisis, adds further emotive dimension to their view of China.

I would suggest that the ever-popular bear case scenario of China’s impending collapse might be driven as much by our own current doubts and forward-looking anxieties as by any fact-based analysis of what is going to happen to China.

I’ve long been known for having a consistent and fairly confident view of China’s ongoing developmental outlook; so I’ll own up now to being fairly relaxed in the face of the suggestion that China might be about to implode.

Among western world nations, Australia of course occupies an almost unique position with respect to China. Our long-standing alliances, our values, our cultural reflexes and our civilizational sympathies lie completely with the developed world and the existing world order, and we’ve done quite well out of that. History has been good to us. But geography is starting to encroach on history, and we now find ourselves in the invidious position of having our little economic wagon inescapably hitched to the China and Asia growth story. Our traditional partners however see China’s emergence as a strategic encroachment on their global economic and political position and prerogatives. So we are making good money but we’re a bit ambivalent about it.

This, in my view, has led us into the development of an entirely ambiguous, somewhat incoherent, dare I say almost schizophrenic popular narrative about China as we attempt to reconcile the way we feel about China (a degree of uneasiness aligned with the views of most western world nations’ feelings about China) with an unprecedented and extended windfall in our terms of trade. The recent fillip in the narrative in Australia to where the conventional wisdom now agrees that “the boom is over” is emblematic of just how impoverished that popular narrative is with respect to China.

The idea that China’s demand for materials and energy is somehow coming to a screeching halt is a complete absurdity. The idea that China is somehow going to suddenly become a services and consumption-driven, energy and raw materials-lite economy goes well past absurdity. That China’s headline growth rates might moderate is natural and was eminently predictable; the law of large numbers and the imperatives of policy-making common sense ensure that this had to happen. On the supply side, massive global investment in new capacity was ultimately going to have an effect on supply-demand balances for materials and energy.

The combinations of these two factors would be significant if it was also not beyond the realms of any clear-sighted, sensible and rigorous analysis.

This confluence of trends has implications for prices and rates of expansion, but the implications in terms of volumes are fairly muted. While in Australia we spent the last six months busily convincing ourselves that the boom was over (which makes the arrival of the Asian Century White Paper rather timely) China has spent the last six months busily importing lots of iron ore. Shipments from Australia continue to grow strongly every month. Prices were down nearly 30 percent in the last quarter but volumes have continued to grow ( 12-14 percent YoY).

The other thing that has gone largely un-noticed in all the schadenfreud about China’s supposed economic woes is that China’s coal imports are up 33 pokie online percent over the first three quarters – 220 million tonnes in the first three quarters.

And that’s the essence of the China story – it is ongoing. China is not finished, the urbanization story is only partly done.

There are still a lot of Chinese people who haven’t yet left the farm and moved to town, who don’t own even a small apartment, who certainly don’t own a car, and who don’t eat or dress too well – just yet. The cities where their future apartments will be haven’t been built yet, and all of the infrastructure within and between those cities is yet to be built. By global standards of infrastructure development (according to the WEF survey criteria), China only ranks 69th in the world.

That’s why China plans to build, needs to build, another 80,000-90,000 kms of highways and 120,000kms of railways by 2020.  China is building about 240GW of new power generating capacity within the next four years, equal to 150 new plants.

I could go on and on.

Another useful way to think about this is in terms capital stock; just think about what it means to be a developing country versus a developed country.

Forget these silly discussions about the proportion of the economy driven by investment versus consumption; axiomatically, a developing country is supposed to be investing a lot in building stuff – especially if they can afford to.

They have an enormous savings pool available to invest. China currently has about 3.5 tons of steel per capita installed in their economy, versus about 13-14 tons in the US.

From another perspective, for all of China’s active and intensive investment in the last two decades, China’s national capital stock is only about $10,000 per capita, compared to the US at about $130,000 per capita.

There’s a long way to go and there are no shortage of challenges; but China has got a pretty decent track record so far, and I hesitate to bet against it. ■