Australia’s Chinese dream must go beyond iron ore – by Michael Smith(Australian Financial Review – October 19, 2017)

Credit Suisse’s top China economist Dong Tao was given a bodyguard to escort him to the airport in Brazil after his 2013 speech predicting the commodities super cycle was over sent the country’s mining stocks down 5 per cent. When he made a similar speech in Australia later that year, no one believed him.

Tao is back in Australia this week with similar bearish comments about Chinese demand for iron ore and coal. This time round, the market would be wise to pay more attention. Tao, one of the first to predict the end of the China-driven commodities super cycle, says Australia’s weakness is that it has relied too long on China’s insatiable appetite for steel and is not planning for the Asian nation’s transition to a consumption-led economy.

“It is obvious Australians can sell beef and wheat to the Chinese but it can do a hell of a lot more if people do their homework properly,” Tao, a managing director for Credit Suisse’s private banking operations in the region, says.

“Supply creates demand. Before [Apple co-founder] Steve Jobs there was no concept of a smartphone. The product iPhone changed peoples’s consumption. The same thing can be said about the potential of the Australian supply chain to the Chinese market.

“I’m here for two days. I love the air, the sunshine, the food and the people here. If I like it, most Chinese will like it. So go and figure out how to tap into the Chinese wallet. It is of critical importance for Australia to figure out what it is going to do.”

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