Its been a truism of international finance and business for years that when the US sneezes, the rest of the world catches cold. In fact we’ve seen it with the way the subprime mortgage crisis has morphed into a global credit crunch that won’t go away, much to the surprise of commentators and economists around the world.

But in terms of the wider economy there is now an emerging theory that the rest of the world is “decoupling” from the US and an early spotter of this trend has been BHP Billiton, which I suppose isn’t that strange considering its the biggest resource company in the world and watches demand closely.

A couple of years ago it spotted what the growth in China was doing to its businesses and has been on top of the decoupling idea ever since, explaining it in detail in its interim report in February this year.

And in last month’s final profit statement it actually played a major part in steadying markets in August’s near meltdown when it revealed it had contacted its major customers (ie. in China as well as elsewhere) in the days leading up to the release of the profit and found that demand had not been impacted by the subprime mess.

So how dependent are we on China? Again BHP has supplied the answer when discussing threats to its future business in yesterday’s annual report:

The influence of China may negatively impact our results in the event of a slowdown in consumption. The Chinese market has become a significant source of global demand for commodities.

China now represents in excess of 45 per cent of global seaborne iron ore demand, 22 per cent of copper, 25 per cent of aluminium and 17 per cent of nickel demand. China’s demand for these commodities has more than doubled in the last five years.

Whilst this increase represents a significant business opportunity, our exposure to China’s economic fortunes and economic policies has increased. Sales into China generated US$9.3 billion, or 19.6 per cent of revenue including our share of jointly controlled entities’ revenue in the year ended 30 June 2007.

In recent times, we have seen a synchronised global recovery, resulting in upward movement in commodity prices driven partly by China’s demand. This synchronised demand has introduced increased volatility in the Group’s commodity portfolio.

Whilst this synchronised demand has, in recent periods, resulted in higher prices for the commodities we produce, a slowing in China’s economic growth could result in lower prices for our products and therefore reduce our revenues.

In response to its increased demand for commodities, China is increasingly seeking self-sufficiency in key commodities, including investments in additional developments in other countries. These investments may impact future demand and supply balances and prices.

That’s something for punters large and small to keep in mind when chasing the fool’s gold in rumours about BHP. China has the gold for BHP and its investors, not Olympic Dam.