http://www.profitableinvestingtips.com/investing-trading/investment-in-a-china-with-lower-growth-targets - Investment In a China With Lower Growth Targets - The Chinese Premier, Wen Jiabao, recently announced a reduction in China’s economic growth target. For the first time in nearly a decade the Asian powerhouse is cutting its growth target. For investors, what does investment in a China with lower growth targets really mean? Does this pronouncement fall in the realm of hard facts or is it for political consumption? Taking the Premier’s words at face value we can be led to believe that China is looking for more sustainable growth and stability. No matter how fast China’s economy has been expanding, it cannot expect to continue at the current pace, based on exports, forever. The pending recession in Europe brings the issue to the fore. If China expects larger and more established economies to pay for its growth through Chinese exports there is a logical end in sight that simple fundamental analysis will reveal. As China grows its need to export exceeds the needs of other nations in the world for Chinese products. China will need to redirect investment internally in order to sustain a high level of growth. It will need to use some of its foreign currency reserves to pay for infrastructure projects in order to maintain employment and economic growth. If this is to be the case where will the investor look for investment in a China with lower growth targets? Another aspect of investment in a growing China or investment in a China with lower growth targets is the lack of transparency in the Chinese system. Chinese leaders may well have decided that they need to reduce their rate of growth in order to avoid the collapse of a true real estate bubble. They may fear that excessive growth will end in an economy-damaging crash. But, despite pronouncements of Chinese leaders the country and its companies have a history of being less clear and forthright than North American, European, Australian, and other investors would like. Thus it is uncertain whether China will really see a drop off in its economic growth rate this year or if the newly proclaimed growth target is simply an anticipated floor above which China will proclaim a higher rate of growth. Profitable investing requires a profitable investment timeline. If one has just purchased stock in a Chinese company one hopes to see ongoing growth in a thriving economy. If growth falls off investors may shy away from investing in China. However, remember that a reduced growth rate is not a recession. If China’s growth rate falls to eight percent or so it beats anything in the Americas outside of Panama. In the end, investment in a China with lower growth targets may lead to a different set of investment opportunities.

1. Investment in a China with Lower
Growth Targets
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3. The Chinese Premier, Wen Jiabao, recently
announced a reduction in China’s economic
growth target.
For the first time in nearly a decade the Asian
powerhouse is cutting its growth target.
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4. For investors, what does investment in a
China with lower growth targets really mean?
Does this pronouncement fall in the realm of
hard facts or is it for political consumption?
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5. Taking the Premier’s words at face value we
can be led to believe that China is looking for
more sustainable growth and stability.
No matter how fast China’s economy has
been expanding, it cannot expect to continue
at the current pace, based on exports,
forever.
www.ProfitableInvestingTips.com

6. The pending recession in Europe brings the
issue to the fore.
If China expects larger and more established
economies to pay for its growth through
Chinese exports there is a logical end in sight
that simple fundamental analysis will reveal.
www.ProfitableInvestingTips.com

7. As China grows its need to export exceeds the
needs of other nations in the world for
Chinese products.
China will need to redirect investment
internally in order to sustain a high level of
growth.
www.ProfitableInvestingTips.com

8. It will need to use some of its foreign
currency reserves to pay for infrastructure
projects in order to maintain employment
and economic growth.
www.ProfitableInvestingTips.com

9. If this is to be the case where will the investor
look for investment in a China with lower
growth targets?
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10. Another aspect of investment in a growing
China or investment in a China with lower
growth targets is the lack of transparency in
the Chinese system.
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11. Chinese leaders may well have decided that
they need to reduce their rate of growth in
order to avoid the collapse of a true real
estate bubble.
They may fear that excessive growth will end
in an economy-damaging crash.
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12. But, despite pronouncements of Chinese
leaders the country and its companies have a
history of being less clear and forthright than
North American, European, Australian, and
other investors would like.
www.ProfitableInvestingTips.com

13. Thus it is uncertain whether China will really
see a drop off in its economic growth rate this
year or if the newly proclaimed growth target
is simply an anticipated floor above which
China will proclaim a higher rate of growth.
www.ProfitableInvestingTips.com

14. Profitable investing requires a profitable
investment timeline.
If one has just purchased stock in a Chinese
company one hopes to see ongoing growth in
a thriving economy.
www.ProfitableInvestingTips.com

15. If growth falls off investors may shy away
from investing in China. However, remember
that a reduced growth rate is not a recession.
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16. If China’s growth rate falls to eight percent or
so it beats anything in the Americas outside
of Panama.
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17. In the end, investment in a China with lower
growth targets may lead to a different set of
investment opportunities.
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18. Current problems in China include whole
cities that have been built but are waiting for
inhabitants, unrest in the interior when lands
are taken over by developers without due
compensation, and the sort of environmental
damage that it took decades for the USA and
Europe to take care of after their rises to
economic dominance.
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19. All of these assume, however, that
investment in a China with lower growth
targets will not end up being investment in an
economy that is due for a burst real estate
bubble and collapse of their banking system.
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20. Direct investment in China may still be
lucrative but investment in a China with lower
growth targets might be tricky.
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21. For more insights and useful information
regarding investments and investing, visit
www.ProfitableInvestingTips.com.