There are four Chinas: Communist China, Free China (or Taiwan), Hong Kong (nominally under Beijing) and those states that are closely allied with China's trade, such as Russia, Japan or the states of Southeast Asia like Burma. All of these investment opportunities are means of making money from the massive Chinese economic boom over the last generation. From 2000-2010, the Chinese economy has averaged a 10 percent yearly GDP growth rate, which is phenomenal. This means that China will easily become a first world country within the next decade.
Invest directly. As of 2010, this is the best way to make money in China. The best bets as of now are high technology, energy and the mobile sectors of the economy. Since China acceded to the World Trade Organization in 2001, the Chinese economy has been forced to become more transparent, with a lessened role for state or party actors. This means that investing is easier than it has ever been and China's boom shows no signs of stopping.
Buy the Yuan. The Chinese currency is strong and is likely to remain so. This is because the Yuan is controlled by the state, not by private bankers. As a matter of course, to combat inflation, the Chinese government has decided to keep the Yuan strong so as to deal with the possibly inflationary tendencies of rapid growth.
Buy into firms that are not Chinese, but do much business with China. Here, one can do no wrong with buying shares in Russian oil firms like LUKOil. This is because China is very oil-dependent and, as her boom continues, she will be demanding more and more oil from Russia, her main supplier. As China grows, she will require increased expert information and investment from places like Japan and Taiwan. She is also outsourcing heavily to Indonesia, Vietnam and Burma.
Invest in Taiwanese electronics such as HTC, Acer or VIA technologies. These are high industries that are involved, albeit illegally, in the Chinese economy. Taiwan officially has no trade with China, but “unofficially” this trade is massive and Chinese companies from Taiwan are making a killing in China. It is likely that this barrier to trade will be lifted as Taiwan and China's economies continue to intertwine. Therefore, it is very likely that Taiwanese firms will be a major part of the electronics and high-technology focus of the Chinese economic boom. Since Taiwan has had transparent trading practices for many years, it is easier to invest in Taiwanese firms in order to make money from mainland China. Especially as China seeks to build her own automobiles, Taiwan's expertise in automotive electronics will become indispensable.
Keep up with the news. China is always making headlines. Make sure your investing keeps up with the political realities of Asia.
- china image by Luisafer from Fotolia.com