The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (TheStreet) -- China continues to be one of the world's most complicated investment destinations. On one hand it is a financial house of cards with a bigger housing bubble than the U.S. and on the other hand it is on its way to dominating the world economic order (if it doesn't already).
What we do know with certainty is that since the peak in the S&P 500 in 2007 the Shanghai Composite is down 60% and the Hang Seng Index is down 30% while the U.S. is down only 20%. Year to date in 2011, both markets are down 20% versus a flat year for the S&P 500.
After such a long period of underperforming it is reasonable to wonder whether China might be due to outperform again. If so, there are certain sectors to consider and certain sectors to avoid. Clearly the Chinese financials carry the greatest risk. If concerns about too much lending play out as some believe then the banks would be take the full brunt of those consequences.
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