China boom Expected to Continue

Jupiter, Fla. (PRWEB) February 29, 2008 -- Larry Edelson takes a look at China's economy and all the industries that are continuing to rapidly grow. Mr. Edelson examines the booming Chinese marketplace and the growth potential Western China is expected to see.

While the rest of the world is in the midst of a severe credit contraction, bank lending in China has recently grown by a whopping 22%. In contrast to past brisk lending, much of the bank lending this time is not going toward overinvestment. Rather, up to 60% of it is going to small business enterprises and consumers. This indicates that domestic consumption in China is on the rise, a precondition for an even stronger economy.

Retail sales during the Chinese New Year holiday soared 16.8%, and that was in the midst of the coldest, nastiest winter weather in 54 years. The booming sales weren't just in the major, east coast cities like Shanghai, either. Retail sales soared 35% in both Chongqing and Anhui provinces, proving that China's boom is beginning to spread westward to the rural areas.

China has overtaken the United States to become the world's second largest consumer of gold jewelry, with sales jumping 34% in 2007. That's even more impressive when considering that only about 10% of the country's population is currently able to afford gold.

China's trade surplus with the world is expected to jump 22.2% in 2008. But even so, the role of exports in China's economy is shrinking as domestic consumer demand ramps up, accounting for as much as 80% of recent gross domestic product growth. Capital investment continues to surge in China, despite six interest rate hikes in 2007 and 11 jumps in bank reserve requirements since the beginning of 2007. Obviously, there is no slowdown in China. And when considering what they have planned next, it's easy to see why the China boom could last much longer than expected.

So far, China's record-shattering growth has largely been concentrated on its east coast. Some 40 million rural residents migrate to the east coast cities each year, creating a boom never before seen in the history of the world. But there are still 800 million Chinese residents living in rural areas. And while the east coast cities are now some of the largest in the world, with extensive infrastructure, the rural countryside remains largely undeveloped.

Over the next five years, Beijing will:

?    Spend up to $200 billion on railways stretching west.

?    Spend $30 billion to connect Beijing with Shanghai via a maglev bullet train that can travel at speeds of up to 300 mph, cutting the travel time between the two cities in half.

?    Build more than 10,000 miles of new expressways reaching west into rural China.

?    Build 97 regional airports at an estimated cost of $62.5 billion.

?    Invest roughly $40 billion in 15 cities to construct subway systems.

"All told, approximately $400 billion should be spent on new infrastructure projects in China in the next five to seven years. That $400 billion will turn into more than $2.8 trillion of economic production by the time it multiplies through the banking system via additional lending. And not one yuan of this includes the hotels, convenience shops, gas stations, or toll road pit stops that will spring up along these new routes," Mr. Edelson states.

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About Larry Edelson and Money and Markets

With nearly three decades of experience in precious metals and natural resources markets, Larry Edelson has played a pivotal role in training Weiss Research staff and in guiding Weiss Research's customers to prudent investments in the sector. His Real Wealth Report, Gold Trader Hotline and Energy Options Alert provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management. His team of technical analysts helps enhance the timing of investment recommendations with the aim of continually improving the performance results for investors.

Mr. Edelson is also a regular contributor to the daily e-letter, Money and Markets. Recognized as an expert in precious metals and natural resources, he is often called upon by the media for his investing views. Mr. Edelson has been featured on Bloomberg, Reuters, and CNBC as well as The New York Times, New York Sun, and Marketwatch.com

Mr. Edelson holds a B.A. degree from Columbia University.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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