There is no secret the Chinese economy is the fastest growing and with the greatest potential. Since the beginning of the decade the ‘center of all nations’ has been the stalwart, moving from emerging status to a world powerhouse. Nearly 20% of the entire population on the planet resides in China.
A progressive economic policy over the last fifteen years has vaulted this once stagnant economy into second place in the world, just being the US. With the brisk pace of growth and very good internal controls over inflation some experts see China taking over the number one spot within five years. It has been quite a transformation but is there any slowing down?
Estimates for 2013 have showing the Chinese economy may grow at 8.4% or more. That would be far better than the 7.9% number estimated to have been achieved in 2012, the slowest growth in a decade. But let’s not feel bad, the Chinese export market is sizzling, with very low wages and plenty of workers ready to build. US companies are keen to the fact China labor is dirt cheap, a unique situation for companies such as Apple, who build their products overseas for a fraction of the cost to build them at home. Some day that will change, standards of living will rise and manufacturing costs will rise but for now China is where it’s at.
The societal changes are fascinating. Twenty years ago you might find more bikes than you could handle, where today everyone there seems to be driving a car. Diet is also changing as the Chinese adapt to a more Western way of life. Those changes may continue to evolve.
In the meantime, the trade to look at is the FXI, or the Chinese iShares 25 index fund. This ETF is a good sampling of names in mainland China, has been strong over the past several months and is poised to continue higher.
