Beijing's Top Priority

Robert Hsu, April 25, 2008

As you know, I recommend investing in countries that are experiencing great economic growth. I always prefer to invest in countries with governments that make growing their economy their number one priority, rather than nations that focus on redistribution of wealth. That's why I continue to recommend China as one of the top investment opportunities of our time.

The Chinese government continues to focus on economic growth as its top priority, not redistribution of wealth. Redistribution of wealth, in theory, is basically taking money from those who have it and transferring it to those who don't. And this process is commonly found in communist and socialist economies.

Despite China referring to itself as "communist," Beijing's economic policies are often more open and capitalistic than developed countries like Japan and most Western European economies. This is because the Chinese have learned through tremendous suffering that government-led wealth redistribution tends to make everyone equally poorer. The only people who benefit from redistribution of wealth are the politicians who carry out the process.

China's continuing success is largely attributed to its commitment to economic growth. Today, China reported its first-quarter GDP numbers for 2008. Influenced by the global economic slowdown, China's GDP slowed to 10.6% year over year in first quarter from 11.7% year over year in the fourth quarter of 2007. The softening was mainly driven by slower growth in net exports, which is related directly to the current U.S. recession.

Aside from the slow-down in exports, other segments of China's GDP, including industrial production, retail sales and capital investments, all continued to enjoy strong growth. This confirms my prediction that the U.S. recession will only have minor effects on China's economic growth this year. I expect the country to still enjoy growth of around 10% in 2008.

Much of this double-digit growth can be attributed to the hustle and bustle in Chinese cities and the efforts that the country is taking to make foreigners more welcome and likely to visit. Profiting from this growth is easy, if you're flexible and able to adjust your mindset constantly.

The biggest mistake most investors make regarding China is basing their investment decisions on outdated assumptions. Things often change quickly in China. Even for someone who visits China as frequently as I or my friends in Hong Kong do, we have to adjust our mindset constantly to take these changes into consideration. If you can do that, you should make mountains of wealth from the economic growth in China.

For more guidance and the best strategies to use to invest in China's great economic growth, as well as the top companies to invest in to profit from China's development, become a member of China Strategy today.

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