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7 Aug 2017

China: The big picture

It is difficult to see a scenario for this NOT BEING the Asian century.

China just keeps punching out the sales and investment numbers for vehicles, white goods, fixed asset investment, outbound tourism and so on, and so on, and so on.

It has been four decades since China began introducing economic reforms and it is still delivering because it has an enormous population (consumer base) and a very low income per capita relative to developed nations such as Australia, United States, Singapore, Hong Kong, Japan, South Korea and Taiwan. (Chart)

Essentially, China (and also Philippines, Vietnam and India) are all mean reverting, playing economic catch-up just like the United States did with the United Kingdom.

The hard part will be to know what to do when the economic stumble occurs during this Asian century.

The United States had its biggest stumble in 1929, it ended up being an economic depression and took the rest of the World with it into financial chaos.

The China Purchasing Managers Index chart pointed to a potential downturn/recession at the end of 2015 start of 2016 but nothing eventuate.

The learning is to be patient, keep investing in line with your appetite for risk and look to take advantage when the catastrophe presents.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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