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Asymetry at work, China is our largest trading partner, We are not their largest trading partner. A few weeks ago Xinhua noted quietly and en passant that the EU was. As you have noted, the stuff we buy from china is the "nuts and bolts" not cheap goods so much as goods with low unit prices. Add to that that china has much newer factories and machinery than the US has.
And as always the old dream of "Oil for the lamps of china" the huge population which could have been a market for goods is finally coming true, but the goods are all made in china for the chinese home market.
We may sell them hides and soybeans and coal, but we don't sell them a whole lot of machine tools or prime movers because we no longer make those items well enough to compete.
Our export profile is rapidly taking on the appearance of an old colonial outpost. Raw materials, foodstuffs, high volume low unit value goods. Meanwhile we are importing a peasant class of workers. Not engineers, not doctors, not educated workers but uneducated hard working peasants. A strange thing indeed. I am old enough to remember the europeans kvetching about the "brain drain" as their best scientists and engineers came to the US in droves. Now the best and brightest no longer come here in droves but in dribbles. Ah well every empire has its bad decades.


Australia should be worried. Economic policy has been run for short term electoral gains for far too long. Australia has a massive external deficit and the upside from commodities from here is limited, particularly if, as it seems, we are headed towards a global economic slowdown. Morgan Stanley is forecasting a slowdown in China, an economic recession seems all but certain in the U.S. and high domestic interest rates are probably NOT going to be enough to save the AUD.

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