How To Invest in China

The Most Profitable Contrarian Investment Strategies for 2010 and Beyond
The 2010 Investment U Conference is underway! And even if you couldn't make it, now you can "bring home" more than 30 breakthrough presentations from the conference... Order the Deluxe MP3/Video Library for $99 to listen and view on your computer, or the Premier CD plus MP3/Video Library for $149 to listen to and view anywhere.

How To Invest in China: Red Capitalist Report #2 an Afternoon Stroll Through China’s Next “Chapter”

by Mark Skousen, Chairman, Investment U
Monday, April 10, 2006: Issue #525

It happened in Beijing, only a block from our Grand Hyatt Hotel where we started our China investment tour. While the rest of our group was resting up or drinking a red wine after taking a long march to the Great Wall of China, I slipped out to walk the streets of the Forbidden City.

Being an author and avid bookstore lover, I couldn’t resist walking into a large, four-story all-Chinese bookstore, even though I knew I would not be able to read the titles.

I couldn’t believe what I saw. The bookstore was jammed with Western textbooks, all freshly translated into Chinese! And there were hundreds of Chinese students buying them, all for $3 to $5 each (in the States, these titles would cost $100 or more). There were literally thousands of American and European textbooks on economics, finance, engineering… you name it. I could tell because the English title and author were listed on each title page.

In fact, three of my own books have recently been translated into simplified Chinese:The Power of Economic Thinking, The Making of Modern Economics, and Economic Logic. Interestingly, chapter six of The Making of Modern Economics is a hard-hitting chapter on Karl Marx titled “Marx Madness Plunges Economics Into A New Dark Age.” The Chinese translation: “Marx and Classical Economics”!

But no matter. The message is clear China is determined to catch up with the West and fast. In this issue, we’ll address how to invest in China during these Asian boom times.

China Is Making Serious Inroads… Economically Speaking

The Chinese government is heavily subsidizing this publishing effort. Every textbook publisher in the country gets a budget from the Chinese government, and they are anxious to publish everything they can get their hands on.

Two publishers approached me on the tour hoping to publish my latest book, Vienna and Chicago, Friends or Foes? (I decided on Century Publishing, Shanghai’s largest academic publisher. The agent told me, “You are very famous here in China, Dr. Skousen”!)

The China boom is evident everywhere in the English bookstores I visited in China and Hong Kong. Here are some titles:

The China Miracle
China’s Long March to a Market Economy
China Inc. – The Next Superpower
Red Capitalist
Fast Boat to China
Launching Your Business in Shanghai

There was one contrarian title, The Coming China Collapse. It was written in 2002, and hasn’t sold well. I don’t think an economic collapse is going to happen anytime soon, though major corrections are bound to happen along the way.

How To Invest in China

China has its problems, but right now, it is experiencing an unprecedented business and building boom. I urge you to get aboard for the ride and invest in China. It will be bumpy, but profitable. Here’s how…

There are more than 50 China-linked American Depository Receipts (ADRs) trading on the New York Stock Exchange and the Nasdaq, including such giants as:

PetroChina (NYSE: PTR)
China Telecom (NYSE: CHA)
China Life (NYSE: LFC)
and China Mobile (NYSE: CHL)

To invest in them all, consider the iShares FTSE/Xinhua China 25 Index Fund (NYSE: FXI).

How to invest in China: the FXI since October 2004

As the chart above shows, it’s a hot investing market.

Good investing, AEIOU,

Mark

P.S. In the third installment on China’s boom, I’ll discuss potential problems that could derail the China rush to capitalism, including internal politics, growing military prowess, overheating of the economy, and the currency debate.

Today’s Investment U Crib Sheet

If you missed the first report on our China investment tour, catch up with it here and learn more about this counry’s industrial boom: Investing in China in 2006: Red Capitalist Report #1 — You Won’t Believe What I Saw In Shanghai! Right now, there are more than 170 cities with populations over a million. And “they are building, throughout the country, the equivalent to a city the size of Houston every month, or of San Francisco every two weeks”