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China - a perfect destination to invest
China is showing a greater urge to travel on the path to economic recovery as the year 2013 has unfolded and new President and Premier look to strengthen its GDP. In addition, the housing market is also showing signs of swift recuperation, with its middle-class citizens aspiring to live a lifestyle like the people in the West. As a result, there is great hope for investing in the Chinese market.

THE YEAR 2013 looks quite optimistic for China, as per George Leong, editor of the financial daily e-letter Profit Confidential. At a time when many experts seem critical of Chinese stocks and predict the inevitable collapse of this nation, Leong observes that under the guidance of the new leadership, China will, over the next ten years or so, aim to hasten the growth of its gross domestic profit (GDP).  

In his recent article titled “Year of the Snake Could Sizzle”, he states that 2012 closed with the Shanghai Composite Index (SCI) at 3.16%; the first positive year for the index after its decline of 21.7% in 2011 and 14.3% in 2010. So far in 2013 as well, the SCI being positive, Leong remarks that he expects this year to be a good one if everything works out well. As such investments could be greatly profitable here.

At the 18th National Congress of the Communist Party of China, the next-decade leaders, viz. a new President and Premier were appointed. The timing of the same was crucial as at this juncture, the Chinese economy, after a bout of seeing such a tremendous growth in its gross domestic product that it became the world’s second-largest economy, leaving behind Japan, is at present, facing quite a lackluster growth.

The Organization for Economic Cooperation and Development recently estimated the rise in the growth of the GDP of China to rally back above 8.0%–8.5% in 2013. The same was previously estimated to be 9.3%. Leong believes that the situation in the euro zone in the near future will largely decide on how far the recovery of the economic situation of China will be and as such the occurrence that risk and uncertainty may yet prevail cannot be ignored.

Leong tends to be bullish about the Chinese economy at a time when others seem to steer shy from the nation. He seems to be full of hopes for improvement in its present delicate situation, considering that it has what is needed to overcome all the snags in its way: the mounting levels of income, the progressing middle class, the resolute government aiming to achieve success with its development programs for power and the 1.3 billion people to back the cause.

The current scenario reflects a slowing down of the HSBC Purchasing Managers’ Index in December last year, with a slight drop to 51.7 in its manufacturing activity from 52.1 in November. Leong compares the financial health of China with that of the U.S. and supports his statement that China will recover better economically and in the longer term on account of its sufficient cash reserves which are above $3.0 trillion.

The Chinese real estate has been exhibiting renewed growth as well. In his article “China’s Real Estate Strong but Not Overheated”, Leong observes that the nation is concentrating on monetary stimulus to ease consumer spending so that it will contribute to the growth of the economy. He feels that the potential for long term growth here is very good. As per the National Bureau of Statistics, there was a rise in the investments in the Chinese housing market by 61.7% from January to November 2012.

Leong is of the opinion that the middle class consumers in China numbering about 300 million are ambitious about attaining a lifestyle like their Western counterparts and they wish to target the same through real estate investments. As home prices have been declining, more and more buyers have been thronging this market and as per Standard & Poor’s analysts, this is an indication of the increasing stabilization in the real estate market. All these factors support the idea that investments in China could prove to be fruitful.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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