This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

8 Reasons Smart Investors Are Bullish on China

NEW YORK (TheStreet) -- Numbers have an important role in the culture of the People's Republic of China. Especially the number 8, which is considered to be the luckiest.

Many Chinese securities have not enjoyed 8's blessings of late. The country's main exchange-traded fund, FTSE China 25 (FXI), is down 14% for 2014. Blue chips such as China Mobile (CHL) (-17.94%),the world's largest cell phone company, and PetroChina (PTR) (-9.25%), a major oil firm, are also off for the year. While there has been little recent good fortune for owners of those Chinese securities, here are eight reasons to be bullish about the economic future of the People's Republic:

Biggest trading nation on Earth: China import and exports more than any other country. That delivers to it a great deal of clout in international trade.

World's largest economy in terms of purchasing power: The biggest client always has the most buying power. Often times, it can result in the best deals.

More net income from exports: Each month, China books billions in profits from buying and selling goods and services with other countries. That has resulted in foreign reserves of close to $4 trillion, the most in the world.

Highest savings rate: In addition to earning more, China saves more than any other country. That keeps interest rates low. It also provides lower cost capital for business lending, home buying, and other commercial activities critical for economic development

Shift from manufacturing to consumer will unlock the spending power of its people: A main goal of Beijing is for the Chinese economy to move away from reliance on manufacturing to unlock the potential of the consumer sector. With more people in the world with more purchasing power than any other country, that is huge.

Urbanization: Economist Carl Weinberg told Barron's, "Bet on China, but not Japan or Europe." China "grows by moving people from the farms to the cities, and every time someone moves off the farm into the city, they contribute six times more to GDP than they did on the farm. If you do this 10 or 20 million times per year, you get six percent to eight percent GDP growth just out of the demographics. So that's my outlook for China." A recent New York Times article reported that China's newest urbanization effort will relocate 100 million people by 2020 ... do the math.

Natural gas reserves: Unleashing the power of natural gas production has done much for the American economy. It has created jobs, improved the balance of trade with other nations, and allowed for the United States to start exporting natural gas. According to consulting firm IHS that was partially funded by energy and manufacturing groups, American natural gas supports 1.2 million jobs and has added $1200 to the annual discretionary income of each family. China has huge natural gas reserves, about 50% more than the United States ... again, the math speaks for itself.

A clean national balance sheet: Japan, Great Britain, the United States and other countries are loaded down with debt. China has debt, but nothing compared to the crushing loads of the others. Combined with the domestic savings rate, Beijing has a great deal of economic flexibility in fiscal and monetary matters.

Short term, there is a bearish outlook for China. Long term, these eight factors and more suggest a country with a bullish outlook. As a result, investors should look at the dip in prices as an opportunity to buy at a discount for greater returns in the future. At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,039.49 +60.36 0.36%
S&P 500 1,992.37 +5.86 0.30%
NASDAQ 4,532.1040 +5.6220 0.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs