Fear not Rio Tinto and BHP Billiton; Kevin Rudd is a China bull.
The former prime minister told Business Spectator that Australia’s biggest trading partner will not slacken its thirst for resources in the short-term. “Demand remains strong” for Australian commodities such as iron ore, Rudd says.
“There is a huge lag in long-term demand for resources and energy because of uneven growth,” adds the Mandarin Chinese speaker, who is an honorary visiting professor at China’s Tsinghua University, the same university attended by Chinese President Xi Jinping.
Rudd says the adverse financial markets reaction to China’s first-quarter GDP figure of 7.7 per cent is because markets react negatively to “any number less than eight.”
“The thing to watch is the change in the qualitative composition of China’s growth,” the former Australian foreign minister says. That may mean China’s “growth rate is reduced” but “the growth rate is still the growth rate,” Rudd says.
In coming decades mining companies will have to adjust to a different Chinese economy, says Rudd. Xi and Premier Li Keqiang are seeking to move China away from state-oriented, heavy industrial growth that consumes massive amounts of raw commodities to an economy that promotes the role of private enterprise and consumption, he says, adding he has been reading about China for more than 30 years.
Xi may become “China’s most decisive leader since Jiang Zemin,” Rudd says. Li’s economic advisers from the National Development and Reform Commission, the People’s Bank of China and the Ministry of Finance are extremely competent, he adds.
China’s economic transformation holds opportunities for Australian businesses oriented around the consumer, says Rudd. Australian food producers could provide Chinese producers with the kind of product they crave, untainted by concerns over its origin or the chemicals used in its production, he adds.
Rudd was chosen by Wall Street mogul Steve Schwarzman to be a board member of his proposed scholarship program and new graduate school at Tsinghua.
“It’s no longer the US, the West and the rest,” says Rudd. “China should be part of any core curriculum.”