Dear Fellow Investor,
There's no denying the strength of the Chinese economy now. Last week, it was announced that the size of the Chinese economy has now surpassed one of the biggest economies in the world -- Germany.
After China's revised GDP numbers were released last week, it became official that China has overtaken Germany as the world's third-largest economy. For 2007, China's nominal GDP rate clocked in at 13%, while its GDP totaled 25.73 trillion yuan. On the other hand, Germany's 2007 GDP was only $3.32 trillion.
This is just another example of how China's economic growth is far outpacing most countries during these tough economic times. Countries like Germany have taken a huge hit in the current financial and economic environment. In fact, the weakening demand for Germany's exports -- it's one of the largest exporters in the world – continues to weigh heavily on the German economy. And that's a trend I expect to continue throughout much of 2009.
Now, there are only two economies standing in China's way from becoming the world's largest economy -- the U.S. and Japan. I wouldn't be surprised to see China surpass Japan in the next three to four years. That's because Japan continues to be plagued with a deep recession due to its aging population and lack of jobs for younger Japanese.
I expect to see Germany and Japan's economies remain sluggish in the coming months and years. And that's why China's economic strength and size continue to be solid reasons for why we should focus our investments in Chinese companies.
While other nations are struggling in the global economic recession and losing their spots in the world's economic ranking, China continues to post robust growth numbers. As a result, it is taking over economic superpowers one by one, and it should quickly earn its own superpower status.
The best ways to profit from China's economic strength and path to superpower status may be a bit confusing for most investors -- especially considering the investment environment we're immersed in right now. But, the truth of the matter is that if you focus on areas benefiting directly from the Chinese government's renewed focus on economic growth, then you should be able to find some profitable opportunities.
In fact, I've recommended a number of Chinese companies in recent months that are directly in line to profit from China's stimulus package and government support. To learn more about what companies you should be investing in now, join China Strategy today!
Invest in Chinese Infrastructure Companies
One of the best areas in China to invest in right now is the Chinese infrastructure sector. If you recall, China made a significant move last year to overcoming the global financial crisis in creating a massive $586 billion stimulus package. So far, it's off to a great start.
Much of the spending from the stimulus package will be focused on infrastructure, building out China's current infrastructure and creating new roadways, railways and other transportation systems. The plan calls for about 75% of the money to come from local governments, and the other 25% to come from Beijing, which means that most of the infrastructure projects will be managed and approved by local governments.
That means that the proposed bridges and tunnels that have been previously stuck at local bureaucracies are now being approved quickly and starting construction. And considering that it took the Chinese a third of the time and less than half of the cost to build Beijing's new airport terminal compared with London's Heathrow Airport expansion, I expect China's infrastructure build-out to happen quickly.
Also, consider that Chinese employees are hardworking, and they are dedicated to their goal. So these infrastructure projects should be up and running soon. And that is not only good news for companies that will be taking part in China's infrastructure build out, it also means we should start to see a positive economic impact from the stimulus package in the second half of this year.
All of this bodes well for Chinese companies, especially infrastructure plays. And that's why at China Strategy, we have aligned our portfolio to take advantage of the increase in infrastructure spending from China's stimulus package. My favorite Chinese company set to benefit from all this spending is China's leading producer of aluminum and alumina.
This company has benefited from China's solid demand for aluminum in its construction, transportation, electricity and packaging industries. In fact, China's aluminum demand jumped 43% last year!
Now, with China's stimulus package and increase in infrastructure spending this year, I'm expecting this company to growth around 20% this year. As the need for alumina and aluminum rise this year, the shares of this company are headed higher.
Since I recommended this company in late November, my China Strategy subscribers are already sitting on a nice 39% gain in just three months! But it's not too late for you to get on board. I'm expecting to see even more profits this year as more funds from China's stimulus package are dumped into construction projects throughout the country. To learn how you can profit from China' increase in infrastructure spending this year, join China Strategy today!
Sincerely,
Robert Hsu
