The problem in Europe and the US was similar IMO. Both had worse controls around the analysis of investment risk and higher leverage than in Australia (our regulations are more in line with Basel III, they've just implemented Basel II). Further, they both invested in s**t assets, mortgages for the US and European countries for Europe. The assets of our banks are higher quality and have higher LVRs.
China won't implode in the medium term, IMO. What will impact us is two things. First of all, the economy will slow to more normal levels. Secondly, the economy will transition from one of infrastructure building to one of consumption and social welfare. Both of these factors will reduce the demand for our big commodities (coal and iron ore). However, nickel, silver, gold, REE, etc will all have demand increase through this change. So, while it isn't good, it isn't all bad.
In the long term, the younger Chinese will get more and more used to their increased freedoms and start to take them for granted. Then, there will be push for regime change and democracy. How China handles this will determine whether or not they implode in civil war (ie, Syria with everybody sitting on the sidelines debating who to help and how) or are able to remain one of the fastest growing countries in the world.
China still has a long way to grow. They have plenty of natural resources and untapped people power. Their GDP per capita is on par with Albania, but they have a lot more potential than Albania!
