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How
to Profit from Explosive Growth in China
Most economists agree that,
over the long run, the U.S. economy is likely to post GDP growth of around
+3% annually. That's very respectable for a large, developed economy.With a total GDP of more
than $13 trillion, that growth rate means that the US economy grows roughly $400
billion a year. To put that number into perspective, consider
that Belgium's entire annual GDP is only about $370 billion and Switzerland's annual GDP is roughly $390
billion.
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Countries normally grow the fastest
during the early stages of their economic development. A century ago, for
example, it wasn't unusual for the U.S. to deliver real economic growth of
close to +10% per year. As the country moved from being a primarily agrarian
society to a global industrialized power, U.S. manufacturing and industrial businesses blossomed. These industries, in turn,
paid out higher wages that led to the emergence of a large middle class and
the development of a powerful consumer sector.
And the U.S. is by no means an
unusual example here -- a number of other countries have followed this exact
same pattern. Consider the case of the Britain in the late 18th and most of
the 19th century. In 1750, England was still a largely agrarian nation with
a total GDP roughly equivalent to what it was 500 years earlier. But as
Britain began to industrialize, growth began to pick up, making Great
Britain the world's preeminent economic and military power by the mid-19th
century. Like the U.S., a sizeable middle class began to emerge in Britain.
Imagine the gains you would have
earned if you had invested in the U.S. or U.K. early in their development,
just as each country's economic growth rate was accelerating. The potential
returns for investors during these growth phases were enormous.
But investors don't have to just
imagine that scenario -- today's emerging markets offer growth potential
every bit as strong as the U.S. or U.K. markets did a century and two
centuries ago. And as we all know, China remains far and away
one of today's most exciting growth markets.
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As you can see in our chart, China's GDP growth has averaged
close to three times that of the U.S. for more than the past
decade. That's not to say that China is wealthier than the
U.S. -- in fact, U.S. GDP per capita currently stands at a
little over $46,000 per person, over 8 times higher than
China's $5,500. But China is starting to undergo the same
rapid transformation from economic backwater to modern
industrial power. Eventually, China may reach a wealth level
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what prevails in the U.S. or Western Europe, and at that point its tremendous economic
growth will likely slow. However, even if that scenario does unfold, it's
still decades away -- average growth in China will likely continue to trend
higher than in the U.S. for years to come.
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TABLE
OF CONTENTS:
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Free
to All Web Site Visitors:
Introductory analysis explaining the growth of the Chinese economy
over the past decade, plus ways that you can profit from it. This
includes:
(1) Growth Sustainability
(2) Buying China
Available
Exclusively to Paying Customers:
Throughout the remainder of this report, we provide several different
securities that allow U.S. investors ways to cash in on China. In addition, we offer an in-depth look at our
two favorite China plays.
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(1.)
Growth Sustainability
China's economic renaissance isn't just a flash in the pan. The
nation's recent economic growth spurt is based on a number of sustainable
factors. For one thing, the Chinese Communist Party (CCP) has been gradually
relaxing its stranglehold on the economy for at least the past 20 years. The
group has relaxed trade and travel restrictions and has eased capital
controls. And as part of the country's accession to the World Trade
Organization in 2001, China has taken further steps to liberalize its
economy and open up its domestic market to foreign competition.
Furthermore, China is undergoing a
period of rapid urbanization. In 1952, China's urban population stood at
just 12.5% -- meaning nearly 90% of all inhabitants lived in rural areas.
And by 1980, almost 30 years later, that figure still stood at less than
20%. However, by 2005 China's urban population was already over 40% and
was growing faster than ever before -- more than double the 1980 level.
This urbanization reflects the
emigration of China's farmers into urban areas in search of higher-paying
jobs in China's manufacturing industries. China's exports have blossomed in
recent decades and the nation has become a key manufacturer of all sorts of
goods, ranging from basic plastic parts to complex electronics.
That
burgeoning export trade has also significantly bolstered China's middle
class. Rising wages for manufacturing jobs
have led to greater domestic consumption. For example, as our chart
illustrates, Chinese automobile sales have nearly tripled since 2005 alone.
And sales are expected to grow another +20% in 2008. This is a
sure sign that China's consumer sector is on the rise.
Are
You Doubling the Performance of the S&P 500?
If You Were a Market Advisor Subscriber You Would
Be!
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Over the past
several years, our Market Advisor "Beat
the S&P" Portfolio has done just that -- by a more than 2-1
margin.
And this is not just some lucky strike. Out of the last 30
positions held, 27 were closed for a profit, with an average
gain of +65.7%. So, if your portfolio isn't doubling the S&P, then you need to subscribe to
Market
Advisor to beat Wall Street!
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(2.)
Buying China
There are three primary ways for U.S. investors to capitalize on China's
booming economy:
-- Invest in mutual funds or ETFs
that have exposure to China
-- Invest in U.S. companies with a foothold in China
-- Purchase Chinese companies directly by investing in
American Depository
Receipts (ADRs)
The advantages of Chinese-focused funds are clear. Funds offer broad diversification and access to a
host of companies that would be difficult for individual U.S. investors to
buy directly. For example, many of China's best companies trade in
Hong Kong but do not trade in the U.S. What's more, it's extremely
expensive for individuals to trade stocks listed in Hong Kong; however,
funds can offer easy access to this market.
If you prefer investing in
individual companies, you are in luck. Over the past five years we've seen an
explosion in the number of Chinese and Hong-Kong based companies that have
listed on the U.S. exchanges as ADRs. This offers an easy way for investors
to buy a stake in a Chinese company on the American markets.
In
the following tables and text, we will outline some of our favorite
securities that allow you to invest in China's explosive growth . . .
END OF FREE
CONTENT
The
remainder of this report is available exclusively to our Market Advisor
subscribers.
In it, our research staff provides a table of almost 90 securities that
allow U.S. investors to cash in on China. In addition, we
offer an in-depth look at our two favorite securities from this list,
including a travel coordinator that expects to see growth of +36%!
Thanks for reading
today's special report -- How to Profit from Explosive Growth in China.
Good investing!
-- Research Staff
StreetAuthority.com
http://www.StreetAuthority.com
StreetAuthority LLC
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614
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