China Booms While U.S. Slumps

Jupiter, Fla. (PRWEB) April 24, 2008

Tony Sagami takes a closer look at the Chinese economy and how it is far from slowing down. Mr. Sagami discusses how the Chinese economy is continually booming, while the U.S. economy is continually slumping.

China has some major political and social obstacles to navigate going forward, but its economy is still doing very good. The final Chinese GDP numbers for 2007 were just recently released and were revised upward from 11.5% to 11.9%. That is the fastest growth rate in 13 years, which means the Chinese economy is not slowing down. Auto sales have exploded across China with over 500,000 people driving new cars off the showroom floor each month. Retail sales have jumped by 20.2% in the first two months of 2008. Foreign investment continues to pour into China. Foreign Direct Investment (FDI) jumped by an amazing 61.3% to $ 27.4 billion in the first quarter of 2008 with Hong Kong, the British Virgin Islands and Singapore seen as the top three sources of new foreign funds.

The Chinese trade surplus expanded by $ 41 billion in the first quarter, an impressive 40% increase over the previous year. The World Bank reported that China is now the world’s second-largest economy as measured by purchasing power with the U.S. is in first place and Germany in third. The Chinese war chest of cash keeps getting bigger. Net foreign reserves increased by $ 61.6 billion in January, $ 57.3 billion in February, and $ 35 billion in March to total $ 153.9 billion for the year.

The Chinese national pension fund said it expects to double in size to over $ 143 billion by the end of 2010. The people running the fund know what they’re doing, too; it earned a 43.2% return in 2007.

Economic news recently heard from the U.S., however, is in stark contrast to China:

Consumer confidence fell to a 26-year low;
Foreclosures were up 57% in March;
Oil burst through $ 115 a barrel;
Initial jobless claims surged to a post-Hurricane Katrina high; and
Citigroup posted a $ 5.1 billion first-quarter loss and announced 13,200 layoffs.

“Unlike the U.S. economy, the Chinese economy continues to grow at a double-digit pace. As civil unrest and political turmoil in China have dominated headlines around the globe, the Shanghai Composite has fallen 49% from its October peak. The 34% drop in the first quarter was the worst ever in China’s history and the recent 11% decline is the worst in over a decade,” Mr. Sagami states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspx?Buying-China-On-Dips-Proves-Lucrative-1689


About TONY SAGAMI & MONEY AND MARKETS

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