The Rudd strategy Part I: political expertise or political expediency

Queensland's coal exports to China will become irrelevant as China and foreign mining giants develop vast reserves of high quality coking and steaming coal in central and southern Mongolia close to China's border. Some dedicated coal railways are already operating while others are under construction. These connect the huge open cut mines with major steel and power generating centres in China and its huge rail network.

Similar large open cuts are operating and expanding in Inner Mongolia with similar infrastructure.

Queensland's coal exports could be influenced by the China factor as Japan and North Korea consider the benefits of major steaming and coking coal operations on their doorstep.

Iron ore

Mining expansion and infrastructure development programs are in progress to meet the insatiable appetite of China's restructured steel industry in Western Australia.

Unlike a decline in coal exports for Queensland, a decline in iron ore exports would impact severely on both the Western Australian and Australian treasuries.

So it comes down to China and steel.

The importance of steel

China's steel production now represents 40 per cent of global capacity and is committed to huge restructuring and ongoing expansion programs to meet planned domestic demand.

The 10th and 11th 5-Year Plans outlined Beijing's ambitious plans for 2030. The 67 per cent urbanisation plan is intended to urbanise 400 million of China's rural population to be incorporated into its massive planned labour force to power its expanding industrial capacity.

That urban population will jump to 450 million when coupled with natural urban population growth.

Such urbanisation demands a massive construction program to expand existing cities, and to construct completely new cities, infrastructure, associated industrial facilities and services.

That is the equivalent of building nearly two cities the size of Beijing every year.

The construction industry will be a major beneficiary and in turn will create new employment opportunities across China. When completed, the new cities will generate massive domestic consumer demand fueled by an enhanced lifestyle and disposable income of the new urbanites and their families.