Other than
cash, gold, and a few select natural resource stocks, the only other investments
I’d make in these wild and crazy times are in Chinese companies, buying them
hand over fist for the long haul.
Yes, that’s
right. Even bearing in mind the recent milk/melamine scandal, which is
outrageous.
You see, China
is about the only economy on the planet with both short- and long-term growth
potential. Just take a look at the latest economic stats …
China’s
August retail sales exploded 23.2% higher to their fastest growth rate in nine
years.
Jewelry sales
soared a whopping 44.3%, making China the world’s second-largest consumer of
gold jewelry. Even more impressive when you consider that only one out of every
ten Chinese consumers can currently afford gold.
The booming
retail sales growth is not confined to just the major east coast cities like
Shanghai, either. That 23.2% figure is for ALL of China, proving that the
expansion is now blanketing even the rural areas.
Think August
might be just a freak month? Well consider the eight month, year-to-date retail
sales growth of 21.9% — up from 16.8% for all of 2007. That’s almost one-third
higher!
No wonder Gome
Electrical Appliances Holdings Ltd., China’s No. 2 electronics retailer,
reported that first-half profits almost tripled.
Have any doubt
about domestic consumption supporting China’s economy? Well these stats prove
otherwise, that domestic demand is soaring.
It would not be
good if all that spending occurred by going into debt. But that’s not the case
in China. Indeed …
Disposable
income in China is soaring.
Urban income
jumped 14.4% for the first six months of this year. And even after accounting
for inflation, the real net gains in urban incomes gained a huge
6.3%.
But it’s not
just the urban areas of China that are doing well.
Rural
incomes are also soaring — exploding 19.8% higher in the first six months of
2008, from a year earlier. Net of inflation, rural incomes are up
10.3%!
Compare these
figures to U.S. net income — adjusted for inflation it’s MINUS .9%.
China’s
seasonally-adjusted Purchasing Managers’ Index, jumped to 51.2 in
September.
The index —
which tracks changes in output, new orders, employment, inventories, and prices
— is showing explosive manufacturing growth and indicates China’s economy is
weathering the global slowdown.
The output side
of the index rose to 54.6 in September from 48.7 percent in August, while the
index of new orders climbed to 51.3 from 46.
And in case you
think China’s exports are slowing, the index of export orders increased as well,
to 48.8 from 48.4. Total overseas sales of Chinese goods are up 22.4% for the
first eight months of the year.
Capital
investment also continues to surge in China.
