A large percentage of our notes over the past 12 months have been focused on how Australia will continue to be in the ‘catbird seat’ due to demand for our commodities from Asia. We also marvel at their ability to think long term and invest for the future, somewhat different to out sagging infrastructure.

This all bodes well for Australian ‘quarry economy’ stocks well into the future, although there will, of course, be hiccups along the way.

As the velocity of money continues to turn up in the US, this makes people more eager to exchange dollars for goods, therefore creating further upward pressure on prices as speculators compete with existing buyers and prices are bid higher.

In recent weeks, we have seen numerous occurrences where underlying economic growth, commodity prices, consumer price indices and credit extension are moving in unison all at the same time that deficits grow and the US Fed increases the supply of liquidity.

The US has been attempting to pump prime the emerging economies in order to kick start their own manufacturing sector, so far the strategy appears to be working.

Last week, there was further news from China where they announced the creation of a mega-city, which will further fuel growth.

The UK Telegraph has the details:

“China is planning to create the world’s biggest mega-city by merging nine cities to create a metropolis twice the size of Wales with a population of 42 million. City planners in south China have laid out an ambitious plan to merge together the nine cities that lie around the Pearl River Delta.

The ‘Turn The Pearl River Delta Into One’ scheme will create a 16,000 square mile urban area that is 26 times larger geographically than Greater London, or twice the size of Wales.

The new mega-city will cover a large part of China’s manufacturing heartland, stretching from Guangzhou to Shenzhen and including Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing. Together, they account for nearly a tenth of the Chinese economy.

Over the next six years, around 150 major infrastructure projects will mesh the transport, energy, water and telecommunications networks of the nine cities together, at a cost of some two trillion yuan (£190 billion). An express rail line will also connect the hub with nearby Hong Kong.

“The idea is that when the cities are integrated, the residents can travel around freely and use the health care and other facilities in the different areas,” said Ma Xiangming, the chief planner at the Guangdong Rural and Urban Planning Institute and a senior consultant on the project.

However, he said no name had been chosen for the area. “It will not be like Greater London or Greater Tokyo because there is no one city at the heart of this megalopolis,” he said. “We cannot just name it after one of the existing cities.”

“It will help spread industry and jobs more evenly across the region and public services will also be distributed more fairly,” he added.

Mr Ma said that residents would be able to use universal rail cards and buy annual tickets to allow them to commute around the mega-city.

Twenty-nine rail lines, totalling 3100 miles, will be added, cutting rail journeys around the urban area to a maximum of one hour between different city centres. According to planners, phone bills could also fall by 85 per cent and hospitals and schools will be improved.

“Residents will be able to choose where to get their services and will use the internet to find out which hospital, for example, is less busy,” said Mr Ma.

Pollution, a key problem in the Pearl River Delta because of its industrialisation, will also be addressed with a united policy, and the price of petrol and electricity could also be unified.

The southern conglomeration is intended to wrestle back a competitive advantage from the growing urban areas around Beijing and Shanghai.

By the end of the decade, China plans to move ever greater numbers into its cities, creating some city zones with 50 million to 100 million people and ‘small’ city clusters of 10 million to 25 million.

In the north, the area around Beijing and Tianjin, two of China’s most important cities, is being ringed with a network of high-speed railways that will create a super-urban area known as the Bohai Economic Rim. Its population could be as high as 260 million.

The process of merging the Bohai region has already begun with the connection of Beijing to Tianjing by a high speed railway that completes the 75 mile journey in less than half an hour, providing an axis around which to create a network of feeder cities.”