Our China-based recovery is a naïve delusion

In the land of babies, booze and betting, leisure, pleasure and home improvements the Government is optimistic that it can return a projected $300 billion public debt to surplus by 2013-14.

The fundamental anchor for that optimism, according to official statements reported in the media, is China's continued economic growth.

Governor of the Reserve Bank, Glenn Stevens is reported as saying:

China's economy has been hit by the downturn, but there are signs now of recovery. China is Australia's biggest trade partner ... Australia's economy has remained comparatively strong due to a strong linkage of key commodity exports to China, which appears to have seen a pick up in growth this year ... Green shoots of recovery seen in China were real ... The durability is the open question and that is a question we don't really know the answer to at this point ... It has certainly been generated by domestic factors in China, not in a pick-up in China's exports.

Given China's export dependence and the falling worldwide demand for its products in the global recession, it's no wonder Mr Stevens is far more hesitant and noncommittal than the government when speaking about the anticipated China led recovery.

In fact, one must wonder whether the "domestic factors" Mr Stevens refers to as nurturing the "green shoots of recovery" are signs of a "real" recovery or just the result of the Chinese Government's two-year 4 trillion yuan (US$586 billion) stimulus plan.

Even assuming Chinese production continues to create demand for our raw materials, to what extent has our government taken into account non-linear events such as problems with water, desertification and other environmental realities in China? Has our government studied how critical water is for China's (or for all countries', including our own) economic growth and well being?

Certainly the former government would have been aware of China's water issues when it signed the The Declaration of Intent for a bilateral relationship regarding water scarcity to complement the Memorandum of Understanding with the Chinese Ministry of Water resources on water management.

And quite apart from the question whether our China-based recovery is a naïve delusion, what exactly are we encouraging or condoning or wishing upon another country and its people - in this case China - in order to avoid any personal economic discomfort?

According to the Pacific Institute's World Water 2008-2009 report (PDF 920KB):

• China's water resources are over allocated, inefficiently used, and grossly polluted by human and industrial wastes, to the point that vast stretches of rivers are dead and dying, lakes are cesspools of wastes, groundwater aquifers are over-pumped and unsustainably consumed, uncounted species of aquatic life have been driven to extinction, and direct adverse impacts on both human and ecosystem health are widespread and growing; and
• in 2005, the Chinese Government acknowledged that 50,000 environmentally related protests occurred that year, many of which were related to water degradation.

More recently, the report by the Leadership Group on Water Security in Asia, Asia's Next Challenge: Securing the Region's Water Future was released in April 2009. It confirms that: