9. Sell, Buy China
China, the country with the world’s largest population of 1.35 billion people and the world’s second-largest economy, accounts for 1.2 percentage points of world Gross Domestic Product.
America, the world’s largest economy, with just 320 million people, added only 0.3 percentage points to overall world GDP growth. Japan, the third-largest world economy, added less than 0.1 percent. As for Europe, with its sluggish GDP despite the European central banks’ €80 billion-per-month government and corporate bond-buying spree, added just 0.2 percentage points to world growth.
Follow the money
Although the great rush to China by manufacturers and luxury retail marketers has slowed, and many businesses chafe at high investment barriers that hinder foreign companies, the Sell-Buy China trend remains on a strong upward trajectory.
For example, a survey conducted in November by the German Chamber of Commerce in China showed that 89 percent of German companies surveyed said they have no plans to leave China, and that the market continues to have high significance for them. Overall, foreign direct investment in China increased 4.2 percent during 2016’s first 10 months, compared to last year.
And while China is the world’s largest population, unlike the Made-in-USA multi-cultural label, Chinese investors seek one-of-a-kind innovation. They’re buying Hollywood studios while Beijing eases restrictions on the amount of foreign films shown on the mainland. And as China’s economy advances and its standard of living increases, its taste for fine wines to fine foods will continue to expand.
Across the investment spectrum, China buys what it can’t make or needs more of. From robotic firms to real estate, from farmland to pig farms, from Cape Point in South Africa to Cape Horn in Chile… despite government attempts by Germany, the US, Australia and other countries passing laws to slow them down – and despite Chinese government restrictions on currency outflows… the China buying binge may be slowed, but it will not be stopped.
TREND FORECAST: President-elect Donald Trump has vowed to kill The Trans-Pacific Partnership deal when he takes office. Though he said during a Republican debate that the "The TPP is horrible deal… a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone," China was intentionally excluded from the “deal” by the Obama Administration.
To fill the trade void, China has proposed the Free Trade Area of the Asia-Pacific. It would strengthen its influence in the region; more nations, including Australia, New Zealand and Malaysia have expressed support.
On the issue of Trump imposing a 45 percent tariff on Chinese goods coming into the US, Commerce secretary candidate Wilbur Ross has stated, “There are not going to be trade wars.”
We agree. While there may be pauses in trade volume, mostly due to economic conditions of slowing global trade and policy negotiations, both nations will find it in their best interest to expand, rather than restrict, bilateral trade.