Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

China Economic Warnings Signals to Invest?

Stock-Markets / China Stocks Dec 17, 2008 - 02:06 PM GMT

By: Money_and_Markets

Stock-Markets

Best Financial Markets Analysis ArticleTony Sagami writes: Because of its rapid economic growth over the last 30 years, it's easy to forget that China is a communist country. The Chinese, like everybody else, love money. But the Communist party is clearly in control.

One of the areas controlled with an iron communist fist is China's media. The main TV station, China Central Television or CCTV, is owned, operated, and controlled by the government.


And unlike the U.S., Chinese government officials can't spout off their own opinion. Instead, they must speak the ‘company line' of the ruling Communist Party and carefully choose their words.

Chinese officials must speak the voice of the Communist Party. And last week, they had a lot to say.
Chinese officials must speak the voice of the Communist Party. And last week, they had a lot to say.

Frankly, I don't pay too much attention to any government official, Asian or not, when they boast about how wonderful everything is. I do, however, pay very careful attention when they start talking about trouble.

You see, glowing words be can true or a complete lie. But whenever the talk turns negative, you can take those warnings to the bank. And the ‘talk' coming out of China has turned very, very negative.

Just last week, five very knowledgeable insiders had some not-so-pretty things to say about the Chinese economy.

Negative Talk #1 : Li Yizhong, head of the Ministry of Information and Technology, said this:

“The international financial crisis is having a severe domestic impact.

“We don't think we've bottomed yet.

“Just about every industry has overcapacity.”

Negative Talk #2: China's economic and social goals are based upon a series of Five Year Plans. The head of that planning body, Zhang Ping, described the economic outlook from his office's perspective:

“The global crisis has not bottomed out yet. The impact is spreading globally and deepening in China.

“Some domestic economic indicators point to an accelerated slowdown this month.

“Excessive bankruptcies and production cuts will bring massive unemployment, stirring social unrest. Owing to dramatic changes in the international economic and financial environment, the Chinese economy faces growing downside pressure.”

Negative Talk #3: The Minister of Human Resources and Social Security, Yin Weimin, echoed the same warning:

“The current situation is grim, and the impact is still unfolding.”

China's premier, Wen Jiabao, did not offer an optimistic outlook.
China's premier, Wen Jiabao, did not offer an optimistic outlook.

Negative Talk #4: The biggest cheese of all, Chinese Premier Wen Jiabao, said a mouthful last week, too:

“We must be crystal clear that without a certain pace of economic growth, there will be difficulties with employment, fiscal revenues and social development.

“In this coming period, we will starkly confront the effects of the sustained deepening of the international financial crisis and pressure as global economic growth clearly slows.”

Negative Talk #5: This last comment wasn't from a Chinese official. It was, however, from someone who should be on top of things since his country is one of the key suppliers of natural resources to China. I'm talking about Glenn Stevens, head of the Australian central bank, who said:

“The most striking real economic fact of the past several months is not continued U.S. economic weakness, but that China's economy has slowed much more quickly than anyone had forecast.

“There is every chance that the rate of growth of China's (gross domestic product) is currently noticeably below the 8 per cent pace that is embodied in various forecasts for 2009.”

Those five insiders have good reason to talk cautiously because the Chinese economy, while still growing at a healthy pace, is getting pulled down by our economy.

Consider these three pieces of economic news from last week …

  1. Chinese exports fell by 2.2% in November, the first time in seven years …
  2. Imports fell by eight times as much, dropping 17.9% in November, and …
  3. Manufacturing output shrunk by a record amount

All those negative comments and sluggish numbers do mean that investors need to be very careful.

But …

Don't think for a second that there isn't opportunity in Asia and in China in particular.

China's infrastructure construction business is booming.
China's infrastructure construction business is booming.

For example, one part of the Chinese economy that's still rocking is the infrastructure construction business. China's $586 billion stimulus plan includes a couple hundred BILLION earmarked for roads, ports, railroads, airports, utilities, and other public works.

And here are three companies that I expect will capture a big, big chunk of that multi-billion construction boom:

Construction boom opportunity #1 —
China Communications Construction (1800.HK) is one of the largest port, highway, bridge, and dam construction companies in China. Plus, the Chinese government is the largest shareholder. Think that gives them a leg up on the lucrative government contracts? I sure do.

Construction boom opportunity #2 —
Anhui Conch Cement (AHCHF.PK) is the largest cement producer in China and will certainly provide thousands upon thousands of tons of cement for the infrastructure program. It is available on the over-the-counter bulletin board (also known as Pink Sheets) market.

Construction boom opportunity #3 —
China Railway Construction (CWYCF.PK) is the largest construction company in China and specializes in railroads. China has unbelievably ambitious plans to expand its national railroad network. And CRC should get most of the building contracts.

I am not suggesting that you rush out and buy any of these stocks today. In fact, China Communications Construction is the only one that my Asia Stock Alert subscribers own.

But being cautious doesn't mean you have to sit on your hands. In fact, buying on dips and selling on rallies is the very best strategy to follow during these turbulent times.

Best wishes,

Tony

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com .

Money and Markets Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules