China's huge hunger for energy and other resources needed to feed its
juggernaut economy is creating a profitable bond with commodity exporters,
helping to refashion global markets and trading alliances.
![Australian Prime Minister John Howard shakes hands with China's Premier Wen Jiabao during their meeting in Canberra, earlier this year. [AFP]](xin_2006032717317882497227.jpg)
Australian Prime Minister John Howard shakes
hands with China's Premier Wen Jiabao during their meeting in Canberra,
earlier this year. [AFP] |
These burgeoning
relations for China will be on display Wednesday when Australian Prime Minister
John Howard inaugurates a 29 billion yuan ($3.6 billion) gas terminal in the
southern city of Shenzhen.
The terminal was built to receive liquefied natural gas shipments from
Australia -- part of a 25 billion Australian dollar ($18.3 billion) 25-year gas
contract that was Australia's single biggest resource contract ever.
The benefits of a booming China for Australia go beyond gas. Sales of
Australian of coal, farm products, iron ore and other resources drove a 46
percent increase in exports to China last year, to $16 billion Australian dollar
($11.8 billion). China is now Australia's second biggest trading partner, after
Japan.
"Clearly the Chinese economy is the biggest source of growth in demand
globally," says David Cohen, a regional economist for Action Economics in
Singapore.
China is the world's biggest consumer of steel, grain, aluminum, cement,
copper, iron ore and zinc, among other commodities. The price of copper on world
markets has quadrupled in the past five years. Crude oil prices have jumped to
around $70 a barrel this year, up from an average $25 in 2002, in part on the
back of Chinese demand.
Worldwide, investments in mining and energy exploration are rising as is
construction of infrastructure, from railways to ports, pipelines to LNG
terminals to keep up with Chinese demand.
The Shenzhen facility, operated by state-owned China National Offshore Oil
Corp. (CNOOC), is the first of 16 planned terminals in coastal China for
receiving LNG. The plants convert the fuel from liquid into gas form, which is
then piped to consumers, industries and power plants.
China's demand for natural gas is expected to rise 26 percent over the next
five years, outstripping 17 percent growth in output. Crude oil demand is
forecast to more than double by 2025, to 14.2 million barrels a day, from the
current 7 million a day, according to the U.S. government's Energy Information
Agency.
Helping Australia's Howard inaugurate the Shenzhen terminal will be Chinese
Premier Wen Jiabao. He just returned from a seven-nation tour of Africa. One
stop on his itinerary was Angola, which this year surpassed Saudi Arabia as
China's biggest supplier of crude oil.
Two weeks ago, China played host to a regional security meeting that included
some of the area's biggest oil suppliers, Russia, Kazakhstan and Iran among
them.
Nearly half of Australia's exports to China are farm products and other
resources, and Canberra and Beijing are now discussing a free trade agreement --
something the U.S. and European Union have refused to do.
Apart from China's rising imports of Australian coal, copper and iron ore,
the economy has benefited from an influx of Chinese students and from growing
numbers of Chinese tourists. So far, trade friction with China has been minimal,
though that could change as the two countries delve into the details of a free
trade pact, he says.
"Australia and China are two of the most complementary economies in the
world," said Malcolm Cook, program director for Asia and the Pacific at the Lowy
Institute, an independent think-tank in Sydney. "There's not too much of a
'China threat' sentiment here."
