China has certainly grown in power over the last two decades. In fact, they have been one of the fastest growing economies in the entire world for quite some time.
The numbers are astounding. We’re talking a 5%-plus annual growth rate. And this growth hasn’t just been a one-off. They’ve been steadily on the rise since the final decades of the 20th Century.
Their ‘mass production, minimal cost’ mindset has them exporting crazy amounts of products across the globe…from clothes and toys to electronics.
Predictions have China outgrowing the US by 2030 to become the largest economy in the world.
Headlines label China an economic powerhouse. And they aren’t wrong. Not right now, at least.
But can they keep this growth up for the long-term?
Bumps in the foundation
If you look past the multi-billion dollar 2008 Beijing Olympics — which was China’s way of proving they have disposable income — and all the other growing figures, there are still clues pointing towards a slowing of progress.
The most obvious sign is in their housing market.
With no property taxes, China’s housing prices are subject to intense fluctuation. When prices are down, buyers come running, hoping to grab a piece of the action, only to let go when prices climb again.
While it sounds good in theory, this extreme instability is not ideal for an economy wanting to take over the global market. Companies are losing money fast.
It isn’t the ideal foundation for any economy, let alone one planning to lead the way.
Undeniable Signs of Progress
Still, it’s difficult to ignore all the billions that hide this property weak spot from the market’s view. China has definitely stepped it up.
While it climbed the economic ranks, China took over 500 million people out of poverty, turning them into a determined middle-class that are excited to use their purchasing power.
Their enormously large population and eager middle-class provide many avenues of opportunity for China.
What this means for Australia
China’s miracle is also helping fuel the Aussie economy. Our trade agreements with China keep us afloat in times of trouble.
But will they remain this reliable? Recent tensions are suggesting otherwise.
And can China keep up their momentum? Or will it all come crashing to a halt?
What are the best investment opportunities coming from China?
And how will they affect Australia and your wealth?
To stay up to date with the latest news on China’s booming economy, visit Money Morning regularly. With daily updates, you’ll always be well-informed on the China story.