Ten years ago the British handed control of Hong Kong back to the Chinese.  This was the start of massive changes to that economy.  State controlled companies were put in private hands and small company started initially to blossom.  The Chinese economy started looking more and more such as for instance a free market.

The effect was incredible growth.

China has significantly more than 1.8 billion citizens and as their economy develops, the middle income grows.  Now the GDP of China is expected to increase significantly more than 10% every year.  This economic growth is so exciting that Jim Rogers, one of the best money managers of our time Gas and Oil production, uprooted his entire family and moved to Asia.  When asked why, he explained “I do not need to offer Chinese stocks.  I want to own them forever and I want my [four year-old] daughter to own them.”

Now that’s what I call a long term investment strategy.

Over the last few years, investors have made a lot of profit the Chinese markets.  If you had bought China 25 Index in the beginning of 2005 you would have made significantly more than 315% on your cash by October 2007.

Though the excitement in the Chinese markets got only a little out of control last year.  As a matter of fact, in May I warned of a near term bubble.  As as it happens I was right. but only a little in the beginning my call.

The index started falling in October of 2007.  Over the last few months, it had fallen almost 33%.

Currently, China is emerging from an economic slumber.  Politically, they’re a communist country.  Economically, they’re waking up to a free market revolution.  I remember the influence China had when I was employed in Singapore.  It included language, social customs, food, and even economics.  Now they’re influential the world over.

In the short term, the outlook appears uncertain.  Some economists believe the economic slowdown in the United States could spread to emerging markets.  For the reason that scenario, the Shanghai market might fall further.  Some advisors have gone so far as suggesting that individuals steer clear of the Chinese markets entirely.

I think they’re horribly wrong and somewhat shortsighted.

Unless you’re centered on very short term trading, now is the time for you to go long China.  The united states is in early stages of a multi-decade economic expansion.  Their economic growth is second-to-none, and their infrastructure is still in early stages of build out.

Don’t allow the recent market correction scare you away.  Consider it as a good way to expand your emerging market exposure at a 30% discount. A good way to have broad experience of the Chinese market is through the iSharesFTSE/Xinhua China 25 Index ETF (FXI).

Brian Mikes may be the editor of the Dynamic Wealth Report, a free investment newsletter that gives investment ideas and news you can’t get from the mainstream investment press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you need to use today.

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