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Signs of a Chinese Economic Recovery, Incredible Ways to Profit

Robert Hsu, July 21, 2009

In this Issue:

China's economy is certainly on the path to recovery! Last week, the country announced that its second-quarter GDP growth clocked in at a mind-boggling 7.9% -- a nice pop from the 6.1% in the first quarter. Now, China is on track to exceed my projection for 7% economic growth in 2009.

I observed this robust economic growth and turnaround firsthand on my recent trip to China, so I wasn't surprised by the strong numbers. This economic rebound was extremely apparent in Xi'an, a second-tier, industrial city in central China that is making a major comeback, striving to regain its cosmopolitan status.

Xi'an was once the New York City of ancient China and it was the first city in the world to exceed a population of one million. But with the decline of the Tang Empire, Xi'an's prosperity fell sharply.

Today, the city is getting back on track, and I was quite impressed with its recent economic growth. The city expanded more than 40% in the past three years, as entire districts are being built out with shopping malls, offices and hotels. And Xi'an isn't alone. Most of the cities in central China -- those not dependent on exports -- are seeing double-digit growth in 2009.

Xi'an and other central Chinese cities are benefiting greatly from the Chinese government's massive stimulus package and the liquidity in China's financial system. In fact, China's central bank announced last week that its foreign reserve surpassed $2 trillion, and the country's money supply expanded to a new level as well, growing 28% this year.

As you might have guessed, this influx of funding is helping the overall Chinese economy recover quickly from the global economic recession and revealing incredible investment opportunities. It's particularly creating a real estate and building boom throughout China.

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Robert Hsu

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