Think-About-It

Five Reasons China Is Not a Bubble

I also think that China is not a bubble BUT not for any of the so called reasons that you provided. I don't get your thinking or economics.

Your reason #1 "Consumption Continues to be Strong" tells us nothing about bubble-status. Consumption was very strong in the U.S. right up to the moment our stock and Real Estate bubbles burst.

Your reason #2 "a transition to a service-related economy." What's the point? That services-heavy economies are less likely to reach bubble status? Again, I give you the U.S.

I'll pass on the others as it's past my bed time but would like to add that in my opinion China's high savings rate is not their problem or challenge as many economist/investors believe -- it is one of their strengths. Try growing an economy with low savings and see where that gets you.

You need savings to fund productive investments which raises living standards and enables more savings which fund more productive endevors which raises living standards and enables more savings... it is the virtuous cycle.

You can not consume your way to prosperity.

A Crack in China's Great Wall

Thanks for the chart.

The Great Bubble of China: Next to Pop?

Jim Rogers vs. Frank Rong. Sorry Frank, but I can't see you winning this one. When Rogers makes a major long-term call as he has done with China (even moving there from U.S.) you sure as hell had not bet against him. His track record is 2nd to none.

There are risks in every country & market and plenty in China as Howard9 pointed out. However, any serious global investor seeking growth should have some China investments for the long haul. It is that simple.

All China's current problems (with the possible exception of desertification) will pass and be replaced by different problems but the overall momentum and drive will continue to push China forward.

How do you think the U.S. looked to outsiders as an investment during our civil war circa 1863? How did we look during great depression etc... Don't let the problems of the day prevent you from investing in China long bull run.

China's Impending Financial Crisis

Where is the long-term thinking?

China is assendant and can continue increasing their standard of living and global competitiveness for decades. The RNM will follow right along as the government stays fiscally conservative. There are no risk-free investemnts but I just don't see much downside risk for a long-term investor that is long the RNB.

Disclosure: long CYB

Good Time to Buy Chinese Currency: Follow the 'Hot Money'

James V, thanks for the explanation. Now I can easily see how the Chinese Governments balance sheet is affected by trade between private companies. Does trade between free market governments (say Canana & U.S.) work the same way?

Also, does it work the same way in the Euro zone even though they use the same currency?

Good Time to Buy Chinese Currency: Follow the 'Hot Money'

Answer: Buy CYB or CNY. I own CYB which pays a money market rate plus or minus any change in exchange rates between $USD & Yuan.

I have a dumb question. Everyone says that if there is a trade imbalance then one government adds to its current account while the other draws down their current account (lowering reserves or adding to their debt ala USA). But isn't that only true if the trade happens directly between governments? If if happens between private enterprises how does that translate to the government's respective reserves or current accounts?