This theory nicely fits another theory advanced by other analysts that China’s industrial boom is almost entirely reliant on American consumption. If the credit crisis sinks the American consumer economy in the second half of 2009, China won’t be able to sell anything to America. And if Chinese producers can’t sell finished goods to American consumers, they won’t need Australian raw materials!

Poof goes the resource boom!

The only trouble with that theory is that it’s complete hogwash.

American’s who believe that China’s boom is utterly dependent on unsustainable patterns of American consumption are sadly misinformed, or deliberately in denial about the changing structure of the global economy.

The facts are the facts. And what are the facts? The urbanization and industrialization in the developing world is hugely resource intensive. These people (in China and India and Brazil and the Middle East and Vietnam and Malaysia) are not building economies to service the whims and fancies of American consumers.

They are building sewers, bridges, factories, cars, roads, railways, airports, power plants, grocery stores, movie theatres and probably even Wal-Marts. The studies here in Australia by both the resource companies and analysts have shown that even Australian resource firms badly underestimated the intensity of demand for Australian resources.

Much of that demand comes from steel for infrastructure, residential, and commercial real estate. Australia has some of the world’s richest ore bodies, from the high-grade iron ore of the Pilbara, to the black coal in Queensland’s Bowen Basin, to Olympic Dam in South Australia (home to 17% of the world’s known uranium reserves).

In the 1960s and 1970s, Japanese and Korean companies were on the ground and in the Outback, looking for joint venture deals to secure long term access to Aussie resources for their post-war, industrializing economies. It is like that today, but on a much, much greater scale.

Today, the place is filled with Chinese, Russians, Indians, and even nomadic American newsletter writers. Australia is as big as the continental United States. Much of it remains unexplored. But there are plenty of investors on the ground from all over the world looking for their stake in key mineral and energy deposits.

Chinalco is looking to develop a huge bauxite deposit on Queensland’s Cape York peninsula. British-based BG has made an unsolicited $13 billion bid to get in on the coal-seam-methane business. A Saudi Arabian firm recently engineered the takeover of a small West Australian mineral sands company that makes titanium dioxide (key in the plastics industry).

My point in highlighting just a fraction of the activity that’s going on here every day is simple: this place is a bonanza for investors. There are far more intriguing resource companies than there are analysts to cover them. And remember, the market value of these company’s assets is generally going up (dramatically in some cases). The only other place on earth where you could find more uncovered stocks is probably the Indian Small cap market.

I was not willing to move to India in 2005, mostly because of my bad stomach, ruined by French cheese and room temperature English beer. But Australia seemed like the perfect place to follow the commodity and Asian booms firsthand, and gain a big edge on investors who weren’t here and accepted the conventional analysis of the resource boom. The meat pies are also excellent.

It’s a decision I have not regretted one bit.