The Quiet Revolution

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But China's hunger for resources has also exposed inadequacies in Australia's infrastructure and work practices. Exports could have been even higher. Long queues of ships kept waiting off Dalrymple Bay in Queensland to load coking coal for China symbolize the problems. In this year's iron ore negotiations, Chinese buyers settled for a 71.5% price increase (BHP Billiton, fresh from securing a 25-year supply contract, had sought to double its price via a rise in the freight rate it charges mills). Chinese officials say supply bottlenecks are to blame for the price hikes. Ambassador Fu has raised the issue with Australian officials. "There is strong investment in the minerals field, but not enough to meet demand," she says. "The price is rising faster than the (Chinese) side can cope with." But Australia's government won't be intervening. "China aspires to be recognized as a market economy," said trade minister Mark Vaile last week. "Well, hello, this is how a market works." If Chinese interests had greater equity in the local resources sector, says an Australian government official, much of the ill-will arising from contract negotiations would disappear. Cashed-up China can afford to invest directly. But it hasn't yet done so in a big way, although it has assets of around $A2.2 billion in resources, real estate, power stations and farms. Still, China's buying potential elicits murmurs about "selling off the farm," an echo of grumbles that were once directed at the Americans and Japanese.

It's a great time to be a consumer in Australia: incomes are rising, interest rates are low, and stores are flooded with a vast array of inexpensive products - from $A12 cordless drills to $A90 DVD players - many of them imported from China. China makes half the world's cameras and one-third of all TVs. In 2004, imports from China rose by almost 26% to $A17.9 billion, almost all of it manufactured goods (such as clothing, computers, toys and sporting goods, telecommunications equipment and furniture). Last year, Australia exported to China a mountain of wool and cotton. Ships carrying a tiny fraction of what China's clothing factories can produce brought back an even bigger mountain of clothing, much of it bearing the labels of Australian and overseas fashion houses.

Maurice Salha, who came to Australia from Lebanon 40 years ago, imports homewares from China, supplying the Mum-and-Dad discount stores some people call "$2 stores" or "junk shops." On a Monday morning in the southwestern suburbs of Sydney, his warehouses are abuzz as workers unload newly arrived shipping containers Since the early '70s, Salha has been buying goods in Asia, watching the focus shift from Hong Kong to Japan to Korea to Taiwan and now to mainland China. When he first went to Guangzhou in 1974, it took him four hours to see all the merchandise at a trade show. "Now it takes six people like me two weeks to cover it," says the quick-eyed Salha, who imports 500 containers a year. Sometimes, he adds, the cost of freight is higher than the value of the goods. He travels to China on trips every six weeks, bumping shoulders with buyers from national homeware chains, multinational merchandisers and a multitude of hungry importers. "As a wholesaler I have to give my guys value," he says, surrounded by faux entombed warriors, meter-high bird cages and multi-colored plastic pots. "There's a constant pressure on me to find goods that they can sell for a 100% margin. Chinese labor is starting to become too expensive in this industry. You'll find they will soon move up the scale into more high-tech goods. It's evolution."