Premier Wen is off to visit Australia, one of China’s most important trading partners. A scholar from that nation has observed that the trading relationship resembles a classic developed economy-developing economy setup – except that Australia is the developing country in this case. The Aussies export loads of raw materials to China, like iron ore, wool and fruit, while China sends tons of value-added goods like computers and clothing back down under. And the hot topic of discussion today is going to be how to extend the scope of those raw materials to include uranium to fuel China’s ambitious nuclear plans. The Australians, for their part, want to increase auto exports to China.
Both areas are issues of contention. There will be much gnashing of teeth over the uranium, on two fronts. One is that Australia currently has a ban on uranium mining in all but three mines across the country, though it could potentially be one of their biggest exports. The other, naturally, is whether to sell something that could be turned into nuclear bombs to an officially Communist, and truly authoritarian nation like China. The US has lost credibility on this issue since it mysteriously agreed to start sharing nuclear technology with India without forcing them to join the Nonproliferation Treaty.
The auto parts case is being taken up by everyone now. The US and the EU are teaming up against China by bringing them before the WTO for their handling of car parts imports. The rich nations want to get in on the action, as China’s car purchases speed up. But China, wisely, wants foreign carmakers to source their parts locally. It’s a natural form of progress, and one that every well-developed economy has practiced at one time or another. But try telling that to the dying giants of Motor City, USA.