Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

China Trading Places with U.S. As Economic Super Power

Economics / China Economy Sep 16, 2009 - 11:07 AM GMT

By: Tony_Sagami


Best Financial Markets Analysis ArticleHere’s a headline that broke my heart when I read it last week: “U.S. Poverty Rate Hits 11-Year High.”

The U.S. Census Bureau reported that a sad-but-true 13.2 percent or 39.2 million Americans are living below the poverty line, defined as less than $22,025 for a family of four. That’s the highest rate since 1997.

And one in five American children under the age of 18 is living in poverty.

Worse yet, those numbers have certainly grown since the data was collected in the spring and millions more Americans have lost their jobs.

Those job losses have translated into a decline in median household incomes, which dropped by 3.6 percent to $50,303. That’s the largest one-year income decline … EVER.

Anyone who thinks that consumers will rescue our economy from this recession is nuts. Plunging home values and stock prices have fueled a record $13.9 trillion loss in household wealth in the United States since the middle of 2007.

A Different Story

That’s quite a contrast from what’s going on in China. The Chinese National Bureau of Statistics released a couple of statistics last week that really caught my attention:

arrow Trading Places — China Rises As U.S. Stumbles  Manufacturing output in August at China’s factories grew by 12.3 percent compared to the same period last year. That’s a big improvement over July’s 10.8 percent increase and above expectations. The prosperity was widespread, but two standouts were steel output (up 29 percent) and auto production (up 90 percent).

arrow Trading Places — China Rises As U.S. Stumbles  Investment in factory equipment and construction, commonly called “fixed investments,” rose by 33 percent in the first eight months of 2009 to $1.65 trillion.

arrow Trading Places — China Rises As U.S. Stumbles  Retail sales climbed 15.4 percent in August from a year before and the best monthly number we’ve seen this year. The strongest sellers were buildings and decoration materials (up 36.6 percent), automobiles (up 34.8 percent), clothing (up 23.3 percent), daily consumer products (up 15.6 percent), and grains and edible oils (up 12.7 percent).

August wasn’t an aberration, either. In the first eight months of this year, retail sales have grown by 15.1 percent.

The reason for these rising sales is simple: Incomes are growing in China.

FACT: China’s per capita income is 108 times higher today than it was in 1949 when the Communists took over.

To put that into perspective, it took Great Britain almost the entire 19th century to raise its per capita income 2.5 times, 60 years to raise its per capita income 3.5 times in the U.S. from 1870 to 1930, and Japan took 25 years, from 1950 to 1975, to increase its per capita income 6 times.

China went through three distinct stages to accomplish that prosperity: 1. Collectivism: From 1949 to 1965, farmers were encouraged to “become better off through one’s own labor” and the government promoted “collective prosperity.” 2. Cultural Revolution: From 1966 to 1976, when the country was ravaged by the Cultural Revolution, “personal affluence,” or building up one’s own family fortunes, was strictly forbidden. 3. To Grow Rich Is Glorious: After China’s reform and opening-up in 1978, the chief architect of the country’s reform, Deng Xiaoping, called for “allowing and encouraging some people and areas to get rich first,” which was leading to common prosperity and would ultimately usher in the unprecedented economic growth China is enjoying now … but it is going to get even better.

Roughly one-third of China’s 1.3 billion citizens are now considered to be middle class. Better yet, the number of Chinese middle class is expected to increase by another 70 percent by 2020.

Don’t faint, but middle class in China is generally defined as $3,000 of annual income. That may sound like peanuts to you and me, but it is the point where households begin to buy non-discretionary items beyond food and housing.

By the way, the Chinese character for “affluence,” or “fuyu,” is formed by components meaning “having a full stomach” and “having foods and clothes.”

That affluence has translated into big sales of things like cell phones (China Mobile: CHL), prescription drugs (China Nepstar: NPD), vacations (Home Inns: HMIN and China Eastern Airlines: CEA), more meat (Zhongpin: HOGS), video games (Perfect Word: PWRD), life insurance (China Life: LFC), and English lessons (New Oriental Education: EDU).

In fact, China Mobile has one of the most lucrative business models I have ever seen. One of China Mobile’s divisions sells 800 million products a day and gets paid roughly one penny for each of those 800 million products. Look, 800 million times anything — even one stinking penny — is a bundle of money.

Better yet, this business gets paid those 800 million pennies every day of the year! No matter how you slice it, 800 million X one penny X 365 days = a mountain of money.

Wait … it gets even better. This company is adding a couple million new customers each and every month and that 800 million daily number keeps growing … and growing … and growing.

And get this — that mountain of repeat business is only 10 percent of this company’s sales.

The Thumb Culture — and the Fortune to Be Made by Serving Them

This product is so popular and pervasive with teenagers and young adults that its use has generated its own nickname: The thumb culture. The thumb culture?

You can see the thumb culture in action at subways, lecture halls, coffee shops, restaurants, and airports, franticly using their thumbs with remarkable dexterity to type messages and surf the Internet on tiny hand-held electronic keyboards.

The thumb culture is becoming so prevalent that there has been a surge in the number of tenosynovitis cases, a repetitive strain injury from excessive typing on miniature keypads.

What I’m talking about is text messaging, also known as SMS (Short Messaging System). Because of instant delivery and low cost, text messaging has rapidly become a wildly popular means of communication among young people.

If you’ve ever watched American Idol, you’ve heard host Ryan Seacrest urge viewers to text message their vote for their favorite contestant.

Text messaging is very popular in America, but one country sends more text messages than anybody else in the world: China.

One out of every two SMS text messages sent in the world are sent in China. Typically, the cost of a text message in China costs about 10 fen (or one cent) to send a text message in China, so we’re talking about a mountain of money.

For investors, that gargantuan growth spells O.P.P.O.R.T.U.N.I.T.Y.!

That is why I consider China Mobile to be the very best cell phone company in the world. That doesn’t mean you should rush out and buy, though. My Asia Stock Alert subscribers already sold China Mobile for a whopping gain and we’re waiting for it to get cheaper before we jump back in.

Nonetheless, China Mobile is prospering along with the Chinese citizens themselves and, unlike the sad trend in the U.S., incomes are rising … not falling.

So you need to ask yourself — should you keep the majority of your equity dollars in a country that is struggling, shrinking … or would it be more productive to invest where the economy and its citizens’ incomes are rising?

The answer is clear and across the Pacific Ocean.



This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

Uncommon Wisdom Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules