China vs Australia

Those keen followers of international events will be well aware of the new cold war, gaining in intensity, between China and Australia.

Here un a nutshell is what has happened

- China is a new world power
- Australia has lots of stuff that China wants (iron ore and coal)
- China has made lots of Australian Resource firms / individuals extremely wealthy.
- Australia's natural resources have helped China grow at a staggering rate.
- Prices for commodities and for bulk shipping have grown exponentially

- China, trying to figure out a way to pay less for resources tried to buy a substantial amount of shares in the worlds second largest mining company - Australia's Rio Tinto. The worlds largest mining Comapny, Australian and Dutch owned BHP Billiton, also made a play for Rio Tinto.

- After much discussions and a change of policy from Rio Tinto both deals died. China was not very happy.

- At the same time as the attemted buyout, the price of commodities jumped once again, making China even less happy - as they now are remninded how little power they have over the price of raw materials.

- China then arrests 3 Rio Tinto Executives (One Australian and 2 Chinese Nationals) stating that Rio Tinto have knowingly been bribing Chinese commercial interests and thus gaining significant price advantages - totally 130 billion dollars over a number of years.

- Interesting timing if this corruption has been going for a number of years

- Rio tinto and BHP have reduced the numver of shipments to china in recent weeks.

Australia refutes the 130 billion dollar claim (from Chinese news agencies) stating that the total monetary amount of iron ore exports do not come near to this figure - let alone as a price differential.

Tit for tat

This my friends is the new version 'Cold War' and the stakes are rising everyday.

This type of incident also highlights the realities of international trade and international shipping. Lobbying, Corruption, Co-ersion and Salesmanship taking place on a massive scale with lots of vested interests. Most of the time it goes unnoticed and is even deliberately ignored by many of the worlds agancies set up to police these things.

In some parts of the world, for better and for worse, nothing can be done without the proverbial 'paperbag' payments. China is one example. In other parts of the world the systems and the players are more accountable to authorities.

What to do? Even in the most sophisticated of legal systems such as the USA, a Bernie Madhoff was able to prosper. The UK and the Europe is also littered with high end (and low end) crooks of the same ilk.

So we cannot blame so called corrupt legal systems and we cannot afford to cast judgement over perceived cultural biases.

This kind of thing, in my opinion starts with the individual.

My advice! Always be aware of the system within which you operate HOWEVER make decisions based on your own moral compass.

Will be interesting to see how this cold war develops over the next few years.

Yours
VS