How’s Ya Mandarin?

Andrew Pegler – 20 November 09

Like mine it’s probably not great but knowing how to say “can I have a job please?” will become handy pillow talk as we crawl out of bed with the US and into bed with China.

It used to be that when the US sneezed we got a cold. So intertwined were our economic fortunes that, while not quite conjoined Bangladeshi twins, we were very much kissing cousins. But that was then and this is now and today China leads the global recovery, not the US. The American drawl that has been the back-drop to our economic fortune is fast becoming a Mandarin mutter to a Bollywood back beat. This waning influence of the US economy on ours is known as decoupling by economists and can be traced back to 2001 when the wheels fell off the dot com boom and it became the dot gone wash-out. The US went into recession, and Western Europe and Japan struggled. We were expected to follow but didn’t.

The economic indicators talk for themselves. For starters, unemployment here is 5.8% while in the US it’s around 10%; housing affordability here remains a big issue while US house prices are either paralysed or falling. Other indicators like budget deficits, trade surpluses etc. all tell the same tale of decoupling economies. In other words while the US may be up excreta creek we have a paddle and are floating down crystal clear waters.

But what does this mean for you? For starters you can expect to be dealing with more Chinese clients and as more Chinese companies set up shop here more of you will be working for Chinese companies. This is already happening in the mining industry. This shift will be felt in other parts of the economy like the arts and popular culture as Chinese movies start to rival US ones and the Chinese aesthetic begins influencing fashion.

But as the RBA governator Glenn Stevens explained at a recent dinner in Melbourne, it’s not all beer and chop sticks because the more income Australia draws from China and India the more we’re exposed to their property bubbles and exchange rate dramas. But as they say, no risk no gain.

So with all the signs pointing to us being sucked along the slipstream of a surging China and India it may be idea to take a leaf out of Kev’s book and brush up on your Mandarin, learn to throw a Peking duck on the barbie and take a few Bollywood dancing lessons. You never know where it may take you.

And in other news… with the extremely low interest rates and the billions pumped into the economy, inflation has been a chief concern of the US Federal Reserve. However, the latest data out has seen US October prices increase less than expected, easing concerns that inflation would rain on the recovery parade. Stay tuned for more US data over the coming weeks.