A crisis is an opportunity riding the dangerous wind (危机是乘坐危险风的机会). This Chinese proverb has penetrated American business parlance to the point of abuse, but seems very appropriate in considering the efforts underway by the PRC government to make the most of the world financial crisis.
As highlighted in an excellent article in yesterday’s New York Times, the tone of the recently concluded National People's Congress hints that government efforts initiated last November will continue to focus on infrastructure development, technical training for unskilled labors, and increased R&D investments. All of these efforts offer the parallel benefit of internal investment and placating, if even to a small degree, populations that failed to benefit from China's surge to the position as the world's third largest economy.
What about the collapse of the Chinese manufacturing-for-export sector? There are a few silver lining here too. Indigenous, professional business managers, a rare commodity over the years, are now more plentiful as best-in-class leaders from closed factories reenter the work force. Transportation costs are way down, wage inflation of the past two years has all but disappeared, and external M&A activity will reported face fewer regulatory issues than in the past.
Conventional wisdom has for years dictated that China must slow down its growth and create engines for domestic consumption to develop a real, sustainable economy. China seems well positioned to ride a forced slowdown via the global economic challenges to a new era of strength.
But you know I am a China bull! If you are with me pop over to my friends at Matthews Funds and put your money where your mouth is. If you are short on cash visit anyway to get the most consistent and comprehensive insights into Greater Asia investing available in the US.