Mutual Funds Investing in China
Like India, China is a developing country with an emerging economy, which has grown at a rapid pace since the 1970s. A move from socialist economic policies to the free market quadrupled the economy from the '70s to 1998. Foreign investment is high. The economy is the fourth-largest in the world and second-largest when measured by purchasing power parity. Its GDP in 2005 was $9.4 trillion. It is the world's fastest-growing major economy and at current rates it will eventually surpass the United States as the world's largest economy. It will probably be the second-largest economy by 2030. 70% of the GDP is in the private sector, which bodes well for continued growth. There has been an overall tenfold increase in the economy since the 1970s. The GDP growth rate is about 10% yearly - although many analysts say that it is actually closer to 13% because the government doesn't survey the private sector properly.
China has propped other economies by taking in imports at a huge rate - with a growth in imports of 40% in 2003. China's industrial production has surged by 50%. China accounts for one-third of the yearly growth in oil consumption, 90% of the growth in demand for steel and all of the increase in copper demand. The largest occupation in China is that of agriculture, for over 50% of the population. Taxes and fees have made farming unprofitable, though, and despite 50% of the population farming, agriculture only takes up 20% of the GDP. China's Economy "China is the world's largest producer of rice and wheat and a major producer of sweet potatoes, sorghum, millet, barley, peanuts, corn, soybeans, and potatoes. In terms of cash crops, China ranks first in cotton and tobacco and is an important producer of oilseeds, silk, tea, ramie, jute, hemp, sugarcane, and sugar beets." It is also the world's largest supplier of red meat, ranks first in coal production, and is the world's fifth-largest oil producer. Despite that, domestic demand for oil and coal has increased so much that China has been forced to export much of the oil it uses from Africa. Coal is by far the most widely-used resource for energy, and as a result China has suffered pollution problems. If anything, China has been doing too well of late. Its economy is growing so fast that observers fear that the result could be inflation or a financial crisis for the country if it doesn't revalue its currency, the yuan. The International Monetary Fund recently informed China that something needed to be done in relation to its currency. Some have said that China's growth is not as high as it should be, and that the return on investment per dollar invested in China is not nearly as high as that of other emerging economies, such as India. As anyone who has been to a large store in America recently knows, many things are "Made in China." But last year, China experienced a labor shortage. Just as in other countries, the minimum wage has risen, workers have gotten out of poverty and gone on to middle-class jobs, and it was difficult for factories to find suitable workers. Companies which rely on Chinese cheap labor to make their product are thus contemplating moves to other countries such as Vietnam or Bangladesh. "Never too late to scramble" "China's main aim then was to gain influence. Now China wants commodities more than influence. Its economy has grown by an average of 9% a year over the past ten years, and foreign trade has increased fivefold. It needs stuff of all sorts-minerals, farm products, timber and oil, oil, oil. China alone was responsible for 40% of the global increase in oil demand between 2000 and 2004." "As a result, trade between China and Africa has soared from $3 billion in 1995 to over $32 billion last year. But China's commerce with the world also expanded over the same period, so Africa makes up only 2.3% of the total. This constitutes about 10% of Africa's total trade." "Different strokes" "Domestically, China is now the sixth-biggest buyer of high-tech goods and services in the world; by 2010 it will be in third place, behind America and Japan. Meanwhile, revenue from software and services has increased by around 50% between 2000 and 2005. They have roughly the same population, but China spends 2.5 times as much on technology as India does. It is already the world's largest mobile-phone market, and the second-largest market for PCs. Moreover, at the end of 2005, China had around 110m internet users, compared with 51m in India; and today China has 430m mobile-phone users, versus 120m in India. The two countries are adopting technology at different paces and in different ways." For more information on mutual funds investing in China, see the website at http://www.offshoreinvestingsecrets.com
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