Investing in China

Last weekend, China's Premier Wen Jiabao told the National People’s
Congress that his government was still trying to effect a slowdown that will
bring the growth rate down to 8% this year.
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Why does China want to do that? Isn't such a blockbuster growth a great
thing for a country’s economy? The answer is somewhat complex. China’s
infrastructure simply doesn’t have the capability to withstand such
explosive growth. The Government needs to be fast in developing those
infrastructures.
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Despite government efforts to rein in spending, fixed-asset investment
roared down the tracks like a train with no brakes. In 2003 and 2004, the
growth rate ballooned by 27% and 26%, respectively. And many Chinese
provinces still have trillions of dollars worth of projects underway.
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The Chinese government says and many economists believe that the
current "Happy Year Story" is set to continue, projecting 8% GDP growth
for the next five years as the labor market expands and the country
maintains its strong position in the technology and materials industries.
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Want to be a rider of this fast train? Our recommendations, as usual, are
two Exchange Traded Funds (ETF):
FTSE/Xinhua China 25 Index Fund (FXI) whose closing price on Wed Mar 9
was $56.75 (yield 0%, expense ratio 0.74%)
and MSCI Hong Kong Index Fund (EWH) whose closing price on Wed Mar 9
was $11.78 (yield 2.3%, expense ratio 0.59%)