Can Australia achieve economic growth without China?

By Stan Grant

China, India, Indonesia, Russia, Brazil: What do these five countries have in common?

They are the future. Our future depends on them. They are not the West.

Collectively, they will account for more than half of all global growth through to 2024, according to figures from the International Monetary Fund. Think again about that: five countries, 50 per cent of growth.

The giant among the five is, of course, China. It has already surpassed the United States as the biggest engine of global economic growth — 28 per cent annually between 2013 and 2018.

By the end of this decade, China is expected to overtake America as the single biggest economy in the world. And of the other four countries — Brazil, Russia, Indonesia, India — each lists China as its biggest trading partner.

The IMF says there is no way the global economy can grow unless these countries also grow. Yet in this week’s budget, did we hear mention of any of them?

No. We did not even hear mention of China. Incredible, given China is Australia’s biggest trading partner, too.

How is Australia handling this hinge point of history?

Australia’s trade with China dwarfs its trade with any other country: more than $90 billion, an enormous 43 per cent of all our exports. For comparison, the next biggest market is Japan, at $19 billion.

Trade is equivalent to 45 per cent of Australian GDP and one in every five jobs in the country.

Treasurer Josh Frydenberg has said this budget is about stimulating, spending and creating jobs. How do we seriously achieve that when our political leaders cannot speak to their counterparts in Beijing? 

In the meantime, we hear increasing talk of the “drumbeats of war”. How can we achieve economic growth and boost jobs when the Treasurer, in his budget speech, cannot mention China by name and instead makes allusions about a more dangerous world (read: China threat) and commits to ever more spending on our military?

This isn’t to deny that we live in a more perilous age or that an authoritarian China does not present a threat — or that we need to keep our defence force ready and equipped for any eventuality. But there are serious questions about how our political leaders are handling this hinge point of history.

China is an indispensable nation; our future depends on it. Our future depends on those other countries that make up half the world’s growth — countries we rarely even talk about.

This is not 1992. We have not just emerged from the Cold War; America is not the predominant or sole power in the world; this is not the end of history. We can no longer say, as Western political leaders did then, that China is on the wrong side of history.

The world is turning, history is turning

In its report The World in 2050, international professional services company PwC lists what will be the top 10 economies in the world:

1.China

2.India

3.US

4.Indonesia

5.Brazil

6.Russia

7.Mexico

8.Japan

9.Germany

10.UK

Where did the West go? The report says simply: today’s developing markets will be tomorrow’s economic superpowers.

Outside of the top 10, Vietnam, the Philippines and Nigeria will be the biggest movers in the rankings.

The report compares the E7 (emerging economies) with the G7. In 1995, the E7 were half the size of the G7; by 2015, the E7 had drawn level; by 2040, the E7 could be double the size of the G7.

A Rip Van Winkle “go to sleep and dream away the future” approach won’t work.

The West has been battered by war, growing inequality, stagnant wages, terrorism, economic collapse, declining democracy and rising political populism.

America — the so-called leader of the free world — is a country damaged by unending crisis.

President Joe Biden talks a good game about “America is back” and rebuilding alliances. But how does America lead a world where economic power has so dramatically shifted?

Betting against America

In his recent speech to Congress to mark the first 100 days of his presidency, Joe Biden said it was never a good idea to bet against America. But that’s precisely what many countries are doing.

China’s massive Belt and Road Initiative — one of the largest infrastructure and investment projects in history, covering 70 countries, 65 per cent of the world’s population and 40 per cent of gross domestic product — is a bet against America.

It is part of Xi’s China Dream of a rejuvenated nation, returned to the apex of global power.

Australia is caught in the crosshairs of this global historical turn. We are still a European outpost in Asia, a country with historical ties to Britain and all in with the US. 

It has served us well, but that world is passing. The geopolitical, economic and military plates are shifting as the world walks ever more treacherous fault lines.

But this isn’t the discussion we have been having post-budget.

Instead, we are talking about debt and deficit and vaccine rollout and possible election dates. Journalists are engaging in the usual round of predictable “gotcha” questions, and politicians are looking to score tit-for-tat political points.

All around us, the world we knew is giving way to the world we don’t truly understand, let alone are truly equipped for.

China, our biggest trading partner, is now a global Voldemort — he who cannot be named.

But call it what we will — or won’t — China looms over our world and it is dragging those other emerging economic giants along with it.

To stay with the movie analogy, for the West, there is no back to the future.


Source: ABC

Hydrogen could be the future of energy, but…

Hydrogen could be the future of energy – but there’s one big road block

Cairney, Hutchinson, Preuss & Chen

CEO of Fortescue Metals Andrew Forrest recently said that green hydrogen offers “a colossal opportunity.” It is a solution that could change the world’s fate in the face of climate change.

Experts believe hydrogen could be a boon for renewables and a death knell for the burning of fossil fuels. “Green” hydrogen requiring only electricity and water for its manufacture.

As per the 2019 Australian National Hydrogen Strategy, Australia is at full-speed preparing to use hydrogen as a clean, flexible, sustainable, and storable energy source to achieve the decarbonisation promised in the 2015 Paris Agreement.

Australia also has the potential to become a superpower in the global supply of hydrogen fuel. Simply due to our world-leading renewable energy capacity and our existing strong networks of infrastructure for gas transport and storage.

There are clear environmental and economic incentives for Australia to establish a hydrogen economy. However it’s not as simple as changing out one source of energy for hydrogen.

For a large roll-out of hydrogen power and for Australia to lead in this space, there’s one huge hurdle that must be addressed. That hurdle is known as “hydrogen embrittlement.”

What is hydrogen embrittlement?

When engineering alloys such as steels or nickel-based alloys are exposed to hydrogen-containing environments, their mechanical performance can deteriorate to the point that catastrophic failure occurs. Scientists and engineers have known about hydrogen embrittlement for more than a century. But the problem remains unsolved.

The National Hydrogen Strategy proposes a kickstart project that allows up to 10 percent hydrogen into existing gas distribution networks. A goal of transporting 100 percent hydrogen in the long term. However, seeing as most of Australia’s existing gas distribution infrastructure is made from steel, embrittlement of these pipelines remains an issue.

A COAG Energy Council-commissioned report highlights that, while most existing structures should be capable of carrying 10 per cent hydrogen under normal circumstances, the situation is different at higher pressures and temperatures, or for welded structures, all of which are present in our existing gas network. It states that further consultation is required determine the tolerable hydrogen percentage for each type of process.

The risks are great: hydrogen is highly explosive and an accident could lead to major damage or loss of life. And potentially setting back our progress with participation in this new industry.

The challenge

The hydrogen embrittlement challenge is a highly complex materials and engineering problem. There are many aspects that still need to be understood before tangible solutions can be proposed.

For example, what are the conditions for hydrogen entry into different metals? Can this be controlled? Is it possible to completely stop hydrogen entry in metals using coatings or other surface treatments? What if these coatings get a scratch? If the hydrogen does get in, under what conditions will it cause failure of the metal? How much hydrogen is too much? How quickly will it accumulate? Can we design new engineering alloys that can better resist hydrogen embrittlement for the global hydrogen economy? If so, will the new alloys be economically feasible?

These questions can only be answered through collaboration between researchers and engineers who have a deep understanding of hydrogen embrittlement.

A solution

The development of materials for a hydrogen economy is a challenge that requires a coherent and coordinated national effort. It’s not a problem that will be fixed with one or two projects.

Hydrogen embrittlement is not just limited to steel. Other alloys are also affected. These materials will be required for hydrogen generation, transport, storage and conversion.

Addressing this issue requires long-term investment in the emerging generations of researchers and engineers. They will serve the hydrogen energy sector for the next 50 years.

Similar national initiatives are already in development in countries such as Japan, Germany, China, and the United States as they gear up for a future hydrogen energy world. Australia will have to follow suit quickly to capitalise on this emerging market.

There are many skill sets that are required to solve the hydrogen embrittlement problem. However, at its core will be metallurgy and metallurgical engineering.

Australia has a long and distinguished history in metallurgy as a result of our natural resources. Metallurgy remains a major research strength at several Australian universities.

This is a strength that will need to be leveraged to solve the hydrogen embrittlement problem. Otherwise, the hydrogen economy will be a long time waiting.

Australian researchers are working on it

Australian researchers are already active and making important new contributions to the hydrogen embrittlement problem.

In order to understand exactly how hydrogen interacts with metals at the atomic level – which is the critical information for designing a metal that can better withstand embrittlement – Australian researchers developed a unique-in-the-world microscope that can directly observe hydrogen atoms in metallic samples.

The new microscopy technique has revealed the first direct evidence that hydrogen clusters at crystal defects, leading to embrittlement. It is a major piece of the hydrogen embrittlement puzzle that needs to be solved to develop a solution to counter it.

Australia already has the ingredients for success – we have the skills, smarts, raw materials infrastructure to support a national hydrogen economy and export market. Our universities, industries and government must work together and lead the world in finding the answer to hydrogen embrittlement.

While the path to a hydrogen future isn’t an easy one, if we can solve hydrogen embrittlement we be much closer to achieving a decarbonised energy portfolio, and creating a new, clean export market in Australia.


Authors: Professor Julie Cairney, University of Sydney, Professor Christopher Hutchinson, Monash University, Professor Michael Preuss, Monash University, Dr Eason Chen, University of Sydney