The Quiet Revolution

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For the country's intellectuals, style queens, foodies and hucksters, however, China is the new black. Every other day, a new research partnership or joint venture is announced, or a delegation heads to Beijing or Shanghai. Chinese supermarkets, traditional medicine, tai chi and feng shui have hit the suburbs, and moviegoers are broadening their taste beyond Hong Kong's martial-arts kickfests. A Tianjin-born property billionaire whose projects have reshaped Sydney is inspired by Shanghai's buildings (fewer columns, more concrete, less steel). Australia has had such infatuations in the past. First it was Britain, then the U.S. and Japan. In the 1980s it was China; now, after a pause, it's China again. But this time, the life force is different: you can sense China's velocity and intensity, a pull and push that can't be stopped, but that hopefully can be managed.

Whether they're consumers or producers, shareholders or voters, laborers or arts mavens, citizens of the world or school children, Australians can feel the dragon's heat. China is at once an old friend, a potential foe, a buyer, a seller, an alien nation and a muse. It's the face and spirit of globalization: Australia's distant factory floor and an endless market for the country's minerals, gas, technology and brain power. China's soft power is seeping into Australia's cities, suburbs and remote corners. It's changed the nation, and continues to change it. Yet the transformation has attracted surprisingly little attention. Just where is this silken revolution heading?

Follow the ore. In the ocher landscape of the Pilbara, in Australia's remote northwest, you'll see what China's appetite for minerals can do to a region - and for mining companies and their shareholders. In 2004, Australian iron-ore exports to China increased by 41%. In such a strong market, Chinese steel producers agreed to a 20% price rise. But if miners had been able to dig up the ore and ship it out faster, the Chinese would have bought even more. Mining company Rio Tinto has been selling iron ore to China for three decades. It has vast interests in the Pilbara, including nine mines and three ports. Through its subsidiary Hamersley Iron, Rio Tinto has a joint venture with Chinese steel producers in two mines, Channar and Eastern Ranges. The Channar partnership (China's first foray into foreign mine investment) began in 1987. Major new port, mine and rail projects will increase the company's production capacity to 170 million tons by next year. "We are running flat out, going as hard as we can," says Sam Walsh, who heads Rio Tinto's iron ore group. "There is a buzz in the Pilbara. Everybody loves a new project. Our Dampier port upgrade is employing 840 people. It's good news for the region."

There's a swagger among miners from Mount Isa to Perth, and it's largely thanks to China. Last year, exports to the country soared: nickel by 88%, coal 72%, copper 35%. No longer do miners feel outdated and outsmarted by the dotcom people. China's growing metal consumption is pushing up prices across the board, giving companies the upside they need to commit to exploration and mining projects. Comalco, owned by Rio Tinto, recently commissioned an alumina refinery at Gladstone in central Queensland, the first plant of its kind to be built in the world for 20 years. The first liquefied natural gas shipments will begin next year from the North West Shelf to Guangdong province: the start of a 25-year, $A25 billion contract that took many Australians by surprise when it was announced in 2002. The country's largest ever export deal, it was negotiated by Australia's Woodside Petroleum with the help of the Australian government. Other LNG projects are now in the works, with China a key customer.