Money

Strong gains in commodities give China’s economy a boost

THE Chinese dragon is still feasting on commodities.

When the Chinese economy began to slow last year it sent prices for Australian mineral commodities such as iron ore into a tumble and the mining boom was pronounced dead by many.

The good news is the Chinese dragon is firing up and recent economic news out of China confirmed that their economy continues to grow.

Chinese spending on new roads, rail and power plants grew by 20.7% in 2012, retail sales rose 14.5% in the 12 months to October and industrial production climbed 9.6%.

China appears to have avoided the hard economic landing many had feared.

That's great news for our economy as China is Australia's biggest customer of mineral resources and our sharemarket is heavily exposed to mining stocks.

In his first speech, incoming Chinese president Xi Jinping vowed to meet his people's aspirations for material wealth, personal happiness and national power.

To understand the significance of the potential economic power of China's one billion consumers, look no further than their love affair with the car.

In 2009, China assumed the crown as the biggest vehicle market on the planet.

New car sales reached 18 million last year and experts predict this could double by 2018.

The challenge to meet demand for coal, gas and iron ore has sparked big plans for new mines, not just in Australia but also in Mongolia, West Africa and even China itself.

While this poses a risk of oversupply and depressed commodity prices in years to come, it is theorised that as other under-developed nations modernise their economies, demand will remain constant for generations.

So, while the short term outlook for commodity prices, and therefore Australia's economic growth, faces some risks from a sluggish global economy, the longer-term view for resources and our wider economy still appears bright, in what is being called the Asian Century.

Jason Mcfadden is is a Certified Financial Planner with JPM Financial Planning. This editorial is general advice only.

Topics:  china, commodities, opinion



Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

Having battled PND four times, Mel says the secret is sleep

'I just thought, don’t all mothers get no sleep?’

'My husband lasted 6 weeks as a stay at home dad'

APN Hey Mummy Feature for online - stock images. Katie Dykes being interviewed for the webisodes. Photo Marc Stapelberg / The Northern Star

FROM the outside, being a stay at home mum looks like a breeze.

THE EXPERT: Stop judging working mothers

SUPER MUMS: Being a working mums comes down to perfecting time management.

"WORKING for money is all right; so is working because you want to.”

Health and nutrition with kids - how do you balance it?

HOW important is health and nutrition in your household?

Smack or no smack - where do you stand?

THE debate is reignited - is smacking acceptable?

Technology and kids: Do you ever cut their wi-fi?

Check out our new video series featuring mums having a chat

Remediation work at slipway progresses

UNDERWAY: Diggers drudging siltation to be placed at the new Slipway site.

Remediation work at slipway progresses

Fast recovery for candidate

ON MEND: Cowper’s Greens candidate Carol Vernon with Senator Lee Rhiannon.

Fast recovery for candidate

Community blossoms in the garden

COMMUNITY GROWTH: Louise Robinson and Kieran Jarrett, from Traditionally Grounded Cafe Nambucca, are keen to take on the bush tucker area of the community garden. The cafe is an initiative run by a local Aboriginal group to provide jobs for the long-term unemployed.

Community blossoms in the garden

Latest deals and offers

Clive Palmer to re-open refinery

Clive Palmer on ABC radio.

Clive Palmer talks about his achievements, election chances and re-opening the...

Dash Cam of Slip in Snow

Even light snow can be hazardous.

Dash cam shows how easy it is to lose control in even light snow.

Chaos outside Istanbul Airport

Turkish police block the road after an suicide bomb attack at Ataturk Airport in Istanbul, Turkey, 28 June 2016. At least 10 people were killed in two separate explosions that hit Ataturk Airport.

Distress as cars escape Istanbul airport after bombing.

Prominent Coffs Harbour beach resort listed for sale

The Aanuka Beach Resort has been listed for sale

Aanuka Beach Resort, without its accommodation component, up for sale

PROPERTY BOOM: Coast prices set to skyrocket

Like other areas in south-east Queensland, the Sunshine Coast is at the start of the upturn on the property clock.

Values predicted to rise 25-33%