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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
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  • Four Examples of China's Amazing Growth 1 comment
    Apr 13, 2011 6:57 PM
    It’s hard to grasp the out-of-this-world growth China has experienced over the past few decades. The country’s GDP has grown tenfold since Deng Xiaoping’s reforms ushered in a new economic era in 1978. However, pessimists point to the very low base from which the economic growth began and the fact that Beijing has manufactured this GDP growth via government subsidies.

    True, China’s economy in the 1970s was less than a blip on the global radar, and the Chinese government has kept the country’s economy afloat when activity started to contract. However, these naysayers can’t deny that nearly every aspect of Chinese life has experienced a dramatic transformation, especially over the past decade.

    The team at CLSA’s China Reality Research (NYSE:CRR) put together a presentation earlier this year that provides some amazing examples of the depth and breadth of this transition. Here are four examples of the dynamic changes that have taken place in China over the past 10 years:

    1. Growth in Equity Markets
      The number of companies listed on Chinese stock exchanges shot up 118 percent from 1999 to more than 2,000 listed companies in January 2011. But that’s only a part of the story. The number of shares traded on Chinese exchanges in January 2011 (3,333.5 billion) represents nearly a 1,000 percent increase from 1999.
    2. Second-Most Billionaires in the World
      After seeing a 64 percent increase in the number of Chinese billionaires during 2010, the country ranks second only to the United States for the most billionaires in the world with 115, according to Forbes. CRR points out that the amount of net worth required to qualify for Forbes’ China Rich List in 1999 was just $6 million, but one needed to have a net worth of at least $425 million to make the cut in 2010.

      China is also very close to having a million millionaires, up nearly 10 percent compared to a year ago.

      This is a testament to the country’s entrepreneurs and business people adopting the American Dream and embracing market capitalism. According to the 2011 Hurun Wealth Report, 55 percent of China’s millionaires are private business owners and the average age is just 39 years old—15 years younger than their Western counterparts.
    3. Dramatic Increase in Car Ownership
      The rise of China’s middle class and increase in average incomes have fueled a booming demand for automobiles. Total auto sales reached 18 million in 2010 and car ownership across China increased from less than 1 percent to 13 percent over the past 10 years. The amount of automobiles in Beijing has increased from 1.4 million in 1999 to 4.8 million in 2010, according to CRR. Research firm ISI Group is expecting China’s total vehicle sales to reach 20 million in 2010—up nearly 900 percent since 2000—and 30 million by 2015.
    4. Booming Travel and Leisure Industry
      Increased wealth has also driven demand for entertainment, travel and even gaming. China’s box office revenues were up nearly 64 percent in 2010 and 4.2 new cinema screens opened every day in China, according to CRR.

    China’s National Tourism Administration reported earlier this year that the number of Chinese tourists traveling outside the country reached 57.4 million in 2010, up 20 percent from 2009. Revenues for Ctrip, China’s version of Expedia.com or Travelocity, have increased 500 percent since 2003. Macau, a popular destination for Chinese tourists, has become the gambling center of Asia and is expected to generate $28 billion in revenues in 2011, according to CRR.

    The following securities mentioned in the article were held by one or more of U.S. Global Investors family of funds as of 12/31/10:  Ctrip.com. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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  • mh001
    , contributor
    Comments (755) | Send Message
     
    "It’s hard to grasp the out-of-this-world growth China has experienced over the past few decades.“

     

    The thing with understanding China is that it is too far away for people outside it and too big for people who are in it.
    27 Apr 2011, 09:03 AM Reply Like
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