All in.

That’s essentially the message Treasurer Wayne Swan is sending about Australia’s odds-defying bet on Chinese growth. The government’s latest budget pledges to deliver the quickest improvement in the nation’s finances on record ― without specifics about how that will happen.

The absence of such detail is telling and can be boiled down to one thing: an even bigger gamble on China’s 10 percent growth and its voracious appetite for Australia’s resources. It’s risky to so fully hitch the hopes of 23 million people to a single nation that’s still developing.

Hypocrisy was in the room last month when Australia rejected a Singaporean offer for its stock exchange. Swan called slapping down Singapore Exchange Ltd.’s $8.8 billion bid for ASX Ltd. a “no brainer.” The whole shareholders-come-first vibe that pervaded before the global crisis lost its oomph among voters.

The debate distracted attention from a far bigger takeover happening by stealth: China’s designs on all things down under. Down under the ground, that is.

The stock market deal would’ve been just a corporate merger, not exactly an affront to Australia’s national identity. Australia is a massive nation with vast natural resources, while Singapore’s land mass is dwarfed by the Great Barrier Reef. Singapore Exchange’s ownership of ASX wouldn’t be a financial colonization by any stretch of the imagination.

Of course, if a critical mass of Australians has reservations about something, lawmakers must listen. And listen, they did. Yet arguments for quashing the takeover ― deterring investment into Australia, for example ― were tenuous. Everyone knows Australia’s resource sectors are booming and those who want a piece of it won’t care who runs ASX.

The real colonization is arguably taking place on the ground ― or, more to the point, beneath it ― in Western Australia. China’s voracious appetite for raw materials to fuel its rise is at record levels and set to continue rising. It’s leading to bubbles in the 13th biggest economy.

There’s even a role for Ben Bernanke. Press reports are full of tales of 24-year-old miners with no college degree making more than the Federal Reserve chairman’s annual $199,700 salary. And Bernanke gets less compensation than Reserve Bank of Australia Governor Glenn Stevens, which many economists around the globe would see as a kind of monetary justice.

In a world wracked by crisis and uncertainty, Stevens has been a steady presence. Australia was that rare developed economy that avoided recession amid the 2008 global crisis. Banks there weren’t devastated by the toxic debt that undid many of Wall Street’s biggest names.

Stevens, though, faces a tantalizingly difficult challenge: combating rising wages that could prove inflationary, while not killing growth. The China effect is a key element of this struggle. A wage-price spiral would only exacerbate Australia’s “two-speed economy” problem.

China is feeding a growing disparity between Australia’s resource-rich western states and Queensland and the rest of the country. Does Chinese demand mean Australia has too much of a good thing on its hands? What if China suddenly slowed? With Chinese inflation holding at more than 5 percent in April while lending exceeded analysts’ estimates, overheating risks are rising.

Australia is flirting with “Dutch disease,” whereby financial benefits of a resource boom lead to a hollowing out of other sectors. The worry is that Australia becomes all too happy to be a mining site for China and takes its focus off a more diverse economic future.

Certainly, the savvy financial-services and technology professionals busily working in Sydney and Melbourne demonstrate the economic modernity that drives growth. Australia is surely on a tear, sending the local currency toward record highs. Yet too much focus is on the 17th-century model of digging things out of the ground and loading them on ships.

Chinese demand is becoming an addiction, and it will force politicians and voters to adapt. Immigration is a case in point. Australia plans to import about 16,000 workers to plug holes in the labor market. Trade is a two-way street. You can’t expect to ship mountains of coal and iron ore overseas and also limit importing labor and foreign takeovers. It’s not working for Japan and it won’t work for Australia.

As the 21st century unfolds, the consensus is that it belongs to Asia, particularly China. Australia’s latest budget shows that Prime Minister Julia Gillard is turning further away from the U.S. and Europe toward this region. That makes perfect sense given its economic potential.

What doesn’t is failing to harness the ingenuity of Australians. Their future in an ever-globalizing economy is about ideas, innovation, education and upgraded infrastructure. Australia’s budget punts all these challenges forward. Why make tough decisions when you can double down on China?

We tend to focus on how China’s growing role as benefactor is reshaping, for better or worse, nations in Africa, Asia and Latin America. Little is said about the consequences of highly-developed nations casting their lot with an economy that could be hit by anything from asset bubbles to social instability.

Talk about a roll of the dice.

By William Pesek

William Pesek is a Bloomberg News columnist. The opinions expressed are his own. ― Ed.

(Bloomberg)