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China Wants the U.S. Dollar to Drop Dead

Before every start dishing that China's economy is export oriented and all that. Do some research: www.allroadsleadtochin...

Although the "headline" number of export/gdp ratio is 40%. It is very misleading. (As an example, Malaysia's headline ratio is 104% of GDP!) Because it doesn't strip out the cost of the goods used to make the export. Look at the study by UBS (link above): Chinese actual "value-added-portion" of export is only 9% of GDP!

It's domestic consumption is 40% of GDP and the central government now had room to grow that up to maybe 60%. Already, export has been slowing for more than a year (remember USA's Christmas orders are all "filled" in China by July, so China's whole year's export numbers are pretty much already known by this time) and yet the expected GDP for 2008 will be north of 9%.

I think a lot of people will be caught off guard by how well China rebounds in this crisis. A lot of people who're short Chinese stocks or sold their china-emerging-market stocks too early will regret it.

China Wants the U.S. Dollar to Drop Dead

This is a long term prediction, so it won't happen overnight.

However, for someone with a long term investment timeline, trying to take advantage of this seismic shift in power, I think the recommendation would be to buy Chinese Stocks.

Not just any random companies, but solid non-export oriented companies that is focused on China's internal economy.

Couple of ideas come to the front:
- Infrastructure
- Insurance
- Internet
- Food/Seed companies

Good thing is that Chinese Stocks have dropped so much, that with this long term strategy, that buying them now could make one very wealthy.