Wang spots a trend rather than a ripple

WANG Jiahua, described yesterday how he had dinner on Wednesday night with a group of Australian friends who are also in the mining game.

WANG Jiahua, the executive vice-president of the China Mining Association, the country's peak industry group, described yesterday how he had dinner on Wednesday night with a group of Australian friends who are also in the mining game.

They decided, he said, to compete for who could pick most accurately the gold price a year hence. They all wrote and signed their guesstimates, backed up by $US100 each, the winner to take the pool in a year's time.

Regular enough, some would say commendable, behaviour for mining identities. But there was a strange, even eerie, aspect to the bet, Wang added. Three people picked exactly the same price.

Does that, he asked the 650 people lunching with the Melbourne Mining Club, make their unanimous forecast a mere ripple, or a trend?

The club meets in the city's magnificent town hall, built in the 19th century from the gold boom in which Chinese miners, traders and entrepreneurs played a considerable role.

It's appropriate, then, that it should have been packed to hear a modern Chinese mining expert, albeit an official rather than a miner or a mogul. On November 1 his association will be part-hosting a dinner the Melbourne club is holding in Beijing, just before the start of China's biggest annual mining conference.

During his intriguing and animated address yesterday, Wang stressed the difference between ripples and trends. He can't and won't, he said, predict in his official role the ups and downs of mineral prices, the ripples, over the short term. But he is interested in longer-term trends.

His audience, of course, was split. Some are only in the game for the ripples. Others look to the longer term.

Wang listed four post-World War II mining booms, driven by European reconstruction, then the rise of Japan, and later the Asian Tigers, followed by China. The first three lasted about 10 years. The fourth, however, "has not yet ended", he assured his audience, who would probably like to be firmer believers. "We should remain confident."

He was refreshingly frank about why Chinese investment in Australia was slowing down -- the mining tax, the failure of "some large projects", presumably headed by Oakajee-Mid West in Western Australia, lagging infrastructure and "labour and indigenous issues".

He urged greater cross-shareholding, a bold suggestion given the barriers against foreign investment in the Chinese industry.

And he viewed China as having the most government intervention in its economy, with Australia having the least. Instructively for the audience, he said the jury is out as to which is better, in trend rather than ripple terms, naturally.

Perhaps he should have asked the lunchers to gamble on forecasts of the respective positions of the two economies a year, or better, a decade, hence.