“The World Bank predicts China may see its economic growth expand by a mere 7.7% this year and rebound to an optimistic 8.6%,” says Leong. “But these metrics may not be easily achievable, especially given the financial crisis in the eurozone.
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New York, NY (PRWEB) October 21, 2012
In a recent Investment Contrarians article, expert analyst George Leong reports that China’s industrial output for the current year is heading for the lowest levels since 2008, when the global recession started, and there was a need for monetary stimulus. With the economies of the eurozone and Europe remaining fragile, Leong states that the demand for Chinese goods and the strength of the Chinese economy doesn’t look positive.
“The World Bank predicts China may see its economic growth expand by a mere 7.7% this year and rebound to an optimistic 8.6%,” says Leong. “But these metrics may not be easily achievable, especially given the financial crisis in the eurozone, hence the need for monetary stimulus in China.”
Leong also notes that the linkage between economies worldwide has become more profound over the past decade, meaning that what happens in China will have an impact on the U.S. economy and the global economy.
With Europe being a major trading partner with China, Leong reasons, the fragile state of the eurozone and Europe, which continue to fight an uphill battle of high debt and muted growth, is worrisome for the U.S. and global economies. He states simply, “China will suffer as demand for Chinese goods declines.”
But, Leong notes that there are some encouraging signs. As the Investment Contrarians editor notes, the country’s exports exploded up 9.9% in September, according to a Bloomberg survey, and Chinese imports increased 2.4% in September, an improvement over the decline in August, but well below July’s increase.
Making matters worse, Leong reports that there is also concern that Mexico will take market share away from China in the manufacturing of cheap goods.
Leong explains, “The country’s wages are just slightly above China’s, where wages have steadily moved higher… more importantly, [Mexico’s] location adjacent to the United States makes for cheaper shipping costs, rather than using containers to ship goods across the Pacific Ocean.”
The bottom line is there’s lots of work ahead for the Chinese government, concludes Leong.
To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.