Pippa Malmgren cannot get over the fact Australia has tied itself to the low-value end of the Chinese economy but doesn’t want anything to do with China’s greatest economic initiative since the Great Wall.
The former adviser to US Presidents George W. Bush and Barack Obama wants a China-obsessed Australia to wake up and smell the hard landing.
“For Australia the big issues are Chinese,” Dr Malmgren said on a visit to Sydney.
“China has already had its hard landing — it’s not a question of if — and they realise they’re not competitive anymore.
“Domestic consumption isn’t happening in China, that’s why they’re going abroad — it isn’t happening fast enough, yet why is Australia banking on that?”
According to the former deputy head of global strategy at UBS — who was among the few to call the GFC; selling her house and moving her family to rent before the 2007 crash — China’s middle class is not burgeoning the way people thought it would.
So instead China is building a middle class elsewhere.
China has shifted the paradigm to its high-profile One Belt, One Road initiative, connecting regional economies, driving Chinese branding and interests and, importantly, building GDP outside the country.
“And the commitment to the build-out of global infrastructure is truly mind blowing. It’s massive,” Dr Malmgren said.
“I find it really interesting Australians are very happy about being tied to the Chinese economy but now the Chinese want to make GDP abroad, the Australians don’t want to go with them.”
So far the Federal Government has not signed an MOU, alongside 65 other countries, to take advantage of the most ambitious global infrastructure initiative in a generation.
Dr Malmgren said it was an opportunity for not just — in the words of former Austrade chief economist Tim Harcourt — “selling rocks and crops”, but for Australia to finally mature as an economy.
The author of Signals: How Everyday Signs Can Help Us Navigate the World’s Turbulent Economy, has been scratching her head as to why Australia does not grow up and join the latest industrial revolution.
“You’ve been a resource-based economy — and I really wonder, I always ask the question — why don’t the Australians move up the value-chain,” she said.
“I mean China has moved up the value-added ladder. They used to make cheap manufactured goods, now they’re going to make more sophisticated manufactured goods — cars, white goods — they’re going to build global brands, why does Australia always just stop half way?”
Dr Malmgren said Australia was better placed than many nations with its skill sets and human capital but had failed to focus on manufacturing.
“There’s no excuse anymore for Australian businesses not to be present on the global landscape,” she said.
By Christian Edwards