The Chinese will always be spending

Wanted to write this piece for a while, US still dominates, No!. By looking harder at the picture, you will notice that the Chinese economy was around US $ 100 B in 1973, since then, it has grown by leaps and bounds to US $ 1,7 trillions in 2005. No, that is also not my point, look harder! Consumption was around 53% of the Chinese economy in 1973 and it was around 41% of GDP in 2005. Now you we are talking, the Chinese will always be spending. If you look at the two pictures below, export has not really the main driver of the Chinese economy, there are two engines that firing pretty rapidly: investment and consumption. The retail industry is even more exciting, it has been growing at a very rapid pace, almost touching 20% in 2007.

I know most people are growing colder each day when Chinese stock market is sinking for a while. Not only that, talk of inflation may pave the way to Chinese economy hard landing as a result of tightening of monetary and fiscal policies. This will have great impact to world economy growth if China and US are heading for hard landing at the same time.

However, I am maximum bullish on China, not for short term but long term. Don't get me wrong, I might buy something tomorrow or next year, it is all depend how cheap some of the stocks are being sold in relation to their intrinsic value. Most of my readers will know how long is long term for me, 5 to 20 years.