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Thoughts on China

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May 21, 2009 – Comments (2)

I have seen a couple posts on economic decline in China, one from naked capitalism

I have thought longer term China would do better but right now it seems they will be quite hard hit.  They had a lot of activity around getting ready for the Olympics and they have a strong manufacturing base.  Well, with an aging population I tend to think the buying spree will be much lower.  I think the baby boomers have pretty much everything they need and much of their spending is truly discretionary. Contrast that difference with every other recession that today's investors have lived through. 

I think consumer spending will simply be less and that will hurt China's recovery more.

2 Comments – Post Your Own

#1) On May 21, 2009 at 10:06 AM, catoismymotor (41.70) wrote:

Good morning Dwot,

I have recently purchased positions in China. Most of them have to do with infrastructure, food and healthcare with a focus on holding most for five to ten years, if not longer. If anyone is strictly thinking of Chinese stocks as being a get rich quick scheme they will be disappointed. Thank you for the post.

Cato

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#2) On May 21, 2009 at 1:34 PM, angusthermopylae (39.27) wrote:

I tend to take the middle road with respect to opinions about China.  When others say, "China has us by the Treasuries," I say that they are probably smart enough to realize that a US collapse would wreak havoc on their manufacturing and export-dependent industries.  When others say, "Rising economic superpower," I say "meh...they've got problems, too."

catoismymotor sounds like he has a good set of picks:  infrastructure, food, and healthcare--the basics for just about any population.  And with a much larger pop. than the US (3-4 times bigger?), then there is probably a lot of room for those sectors to grow.

From an academic standpoint, your points, dwot, about aging population and a slower-than-expected growth are probably good things for China...maybe they can avoid the overheating and excesses of the West's recent past and have a more stable recovery.

...that, and if higher-ups get too cute with money, the government just executes you...

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