Financial advisor says China’s economy continues to heat up

Long term, financial advisor Dennis Tubbergen thinks China might be a good bet.

Grand Rapids, MI -- (SBWIRE) --06/02/2011 -- Dennis Tubbergen is a financial advisor, advisor to financial advisors, author and radio talk show host. In a blog he posted on his website on May 17, 2011 he gave his clients and readers his take on China and its economy.

“An article published in The Wall Street Journal on May 11, 2011 outlined some of the economic gains that China has achieved over the last couple of years,” began Tubbergen.

He quotes the article as saying in part, “A decade ago, China wasn’t the top trading partner for even one of the Group of 20 economies. Today, it’s the biggest trading partner for six (Australia, Japan, Korea, India, Russia and South Africa), has replaced the U.S. as the top export market for a seventh (Brazil), and risen in import for the rest.”

The article goes on to quote Lawrence Summers, Harvard University economist and former aide to President Obama, as saying when people are writing history accounts in 50 or 100 years about our present time, it will not be about America and its current financial problems or the recession we recently endured, but will be about “how the world adjusted to the movement of the theater of history toward China.”

While China’s exports continue to expand globally, the WSJ article chose to emphasize just how much the trading scene has changed by stating, “In Japan, the largest maker of construction equipment, Komatsu Ltd., drew 2.3% of revenue from China a decade ago; today it gets 19%. Newly hired college graduates take a two-week quickie Chinese course, replacing English classes the company used to require. In South Africa, China now supplies half the imported clothes and more than two-thirds of the toys. In exchange, Chinese consumers enjoy oranges from Egypt, cocoa from Ghana and wine from South Africa.”

“While China is making significant economic gains, their gains are not without side effects,” cites Tubbergen. “Inflation is a large concern presently for the Chinese.”

Tubbergen refers to a Bloomberg.com article from May 10, 2011, which states in part, “China’s inflation held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy. “

Bloomberg goes on to say that prices for consumers in China rose 5.3 percent from last year and that “inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year.”

U.S. Treasury Secretary Timothy Geithner recently said China needs a stronger yuan to increase domestic demand and to contain the price of goods.

“China’s policymakers are allowing the Chinese currency to appreciate against other world currencies including the U.S. Dollar as well as raising the bank’s reserve requirements – actions that traditionally slow inflation,” explains Tubbergen.

Tubbergen believes that long term, China may be the economy to bet on and that China may even have the currency to bet on.

“Well-known investor Jim Rogers this week stated that he thought the Chinese currency would be one of the best globally in the near future,” notes Tubbergen.

According to Bloomberg.com on May 12, 2011, Rogers is quoted as saying the U.S. dollar is going to be a ‘total disaster’ due to our country’s position as the world’s largest debtor and the policies currently being undertaken by our Federal Reserve. Rogers is also quoted in the article as saying “The Chinese yuan is likely to be a ‘safe’ currency.” Rogers went on to criticize Fed Chairman Ben Bernanke by saying Bernanke only understands printing money and does not understand economics.

“Short term, I believe, the looming credit crisis in Europe could be bullish for the U.S. Dollar,” concludes Tubbergen. “But long term, China may still be a good bet.”

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at http://www.dennistubbergen.com. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at http://www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.