Investing in China


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Over the years, China’s economic stability has long been a questionable stance in the face of the rest of the world’s surmounting economic problems. While the rest of the world has seemingly plunged into economic distress within the last ten years, China has been quietly sitting in the background, investing in foreign countries, manufacturing goods for export, and investing heavily in their military forces as well as in education, for the future of China’s direction. With all of the free economic zones operating in China and the banking system which may be heading for a default soon, which makes investing in China questionable over the next few years.

Foreign Investments

Since the early 1970’s, the economic policy of China’s foreign investments with economic development in the third world, has seemingly solidified China’s place in the world for years to come. The Chinese have been going into third world countries over the last few decades and have been buying up the rights for purchasing and mining certain raw materials should they become in high demand, and in return the Chinese government has invested billions of dollars (equivalent) into the economic development projects to elevate the economic standing and rise in living for depressed countries and areas. It has been through this series of foreign investments and purchasing of primary rights for raw materials, that investors have looked at China as a safe bet, being that there were always these promises as a great way to invest without risk.

Economic Zonesinvesting in china

There are about 15 free economic zones in China, that deal with other industrialized and capitalistic nations and economies, such as those in Europe and the U.S. But rising geo-political tensions tend to keep economic coops at bay. The difference between national tensions between capitalistic nations and corporate relations, is that while China may be held at bay by suspect when it comes to governmental dealings, corporations are not bound by the same restrictions, unless there are specific laws prohibiting business and deals with the nation. These economic zones have provided cheaper products streaming into the capitalist nations, and have created jobs; not manufacturing jobs, but corporate and sales jobs. The key to investing in China when it comes to buying stocks from companies, especially those that manufacture with what are known as audit-able factories. These are factories that abide by international labor laws as well as international humanitarian laws. In essence, they are factories that not only are chosen by businesses in the West, but are also either owned and operated, or partially funded by the Western companies and considered to be a safer bet when investing in China’s economy.

The Chinese Banking Economy

We have discussed in previous articles the importance of national stability and economic stability when looking to invest in national currency or bonds, and the same runs true if you’re going to bank with Chinese banks or Chinese corporations. Research is always key. The biggest concern when dealing with China, is as has been voiced over the last couple of years, on a looming default of the national Chinese. International concerns have been voiced that with a looming default, and social change starting to erupt in China (better wages and working conditions), calls into the security of Chinese manufacturing capabilities and the stability long term of investments with Chinese companies as well as the stability of the nation itself. Unlike the more first world nations that rely on secure banking to fund their local and national economies, China has a series of under the radar banks that all report upwards towards the national banks. They’re style and forms of business became shadowy by nature and the legitimacy of how they do business and maintain money and profits, furthers the West’s distrust of the Chinese banking system.

The West is in constant competition with the East, and China has constantly and historically been the jewel of the East. Currently the importance of those looking to invest in China can still jump on board, but need to identify the issues surround the country and its business practices. Understanding how to invest smart is your best chance to be able to gain a sizable return on your investment. While economists understand that China can be a house of cards, they also have been able to stay afloat during the global economic meltdown since the early 2000’s. China has been in existence as a unified nation as one of the oldest on the planet, with roughly 10,000 years of history throughout the various dynasties. A smart investor is an investor who knows the company or product that they are investing in, especially when both have been long established, which years of practice to gain economic stability and perfection, making it easier for one to want to invest in China, not just speculate on the promises that could be gained.

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