Focus Advisory

Can China Take Up Consumption Slack From the U.S.?

Exports as a % of Chinese GDP is approximately 10%. The U.S. accounts for 24% of those exports. EM's account for the plurality of Chinese exports.
The Chinese are trying to hold up exporters, but will realize a stronger currency will increase consumption. In so doing, they will also accomplish their goal of moving their exporters up the supply chain as they are forced to become more competetive.
Bottom line: The Yuan will rise and Chinese consumption will rise in kind. Having said that, it will not happen overnight, but will be a strong trend over the next 3-5 years.
Get long the Yaun with CYB. I am long this note for clients and believe it will provide a bond like return over the next 5 years. The underlying currency that you are invested in over the next 3-5 years will be the most important decision an investor makes.
Thank you for the article...good stuff.