China Still Holds Fantastic Investment Opportunities Despite Its Falling Export Market

Exports Fall, But There's Plenty Of Life Left In China

Date 27/08/2008

The Right Side

Ben Traynor

Received wisdom has it that China will be dragged down by the other major world economies. But let’s not be so hasty. The signs are that there’s still plenty of life left in the Dragon. And that’s not just good news for China — it’s great news for western investors looking for growth.

The first part of the "China will suffer too" story went a bit like this: as western economies slowed, they would curb their demand for Chinese imports. As a result, China’s export engine would stall, undermining its economic growth story. Fair enough as far it goes — a similar fate has befallen Germany.

Indeed, China’s exports have been hit. For the period January to July, China’s trade surplus fell 9.6%. But there are signs that the domestic economy is taking up the slack.

Retail sales in July showed growth of 23.3% year-on-year. That’s a record high. Meanwhile, China’s urban fixed-asset investment in the first half of the year was 27.3% higher than a year earlier. It all suggests a big difference between China’s economy and those of Britain, Europe and the US. A difference that can be summed up in one word — confidence.

That’s not to say China will continue to post record growth rates. There probably will be a slowdown — but a slowdown in China, with its double-digit growth, still leaves room for some impressive figures.

"As the authorities appear to have now shifted their top priority from curbing inflation to fuelling economic growth, investors keen to enter the Chinese market have been given an injection of confidence," says Sherman Chan of Moody’s Economy.com. "Investment will likely continue to grow at a breakneck pace."

Zhu Baoliang, senior economist at the State Information Centre, adds this:

"Although export and trade surplus growth could continue to fall in the coming months and the economy is set to decline, the overall economy can still manage to grow at 10% this year."

The bottom line is simple — despite the likelihood that its economy will weaken, there is still growth in China. China will continue to be a major global driver.

So how does this relate to you, as a private investor? Well, buying Chinese shares directly isn’t an easy option. Nor is it a very good one. Besides, China's stock market is extremely volatile - and you're at an informational disadvantage.

So what can you do? Well, some time ago my colleagues and I at The Fleet Street Letter published a report. It reveals how British investors can benefit from global economic growth even while our economy stalls. Without buying dodgy foreign shares traded on hot house markets.

That report is still available. And with Britain’s economy now officially at a standstill, it is more timely than ever.

Many readers have already obtained a copy. But if you’re yet to do so, I urge you to take a look at it now.

Read on to find out how you could continue to grow your portfolio despite the stagnation of the UK economy.

Until tomorrow

Ben Traynor

Editor

Selected articles:

Garry White on why copper is your next profit opportunity.

Tom Bulford on plans to make London even bigger.

The Daily Reckoning — Gold — the cash that no central bank manages

After the biggest spending and borrowing binge in history, Americans need time and money. They need to pay their debts. They need to build savings for their retirements. They need time and money to recover from their mistakes.

What kind of mistakes?

Well, down near the bottom of the ladder, people bought houses they couldn’t really afford to own in places they couldn’t afford to live. And cars they couldn’t afford to run. Those mistakes need to be undone. Which is why there are so many foreclosed houses on the market... and why house prices generally are falling.

S&P/Case-Shiller reports that house prices took their biggest hit ever in the second quarter of this year. They were down 15.4% from the year before.

You can read the Daily Reckoning in full here.

P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.

^ Back to top

LinkedIn
Twitter
Del.icio.us
Digg
Facebook
Google Bookmarks
Livejournal
StumbleUpon