china e-con-omics

chairman mao

emil says:
most economists suggest china needs to stimulate their local domestic demand and move away from an export and government infrastructure-spend economy. from what i see here the malls are empty.  there are many starbucks but there are no lines at any of them. there are cartier, gucci, and prada stores everywhere but the only thing people do in the malls is warm up and get a nibble at the food court.  walk out of a nike store and you will get crushed by folks trying to take you down the alley (right alongside the nike store) to sell you fake nikes. it's a culture of copying. there is little original in any mall or public commercial space. everything is european or american save for the occasional local food spot. everyone seems to be wearing knockoffs and i don’t know what would make them adjust away from that. the thousands of highend retail stores seem to be waiting for something to happen.  could they be waiting for the middle class to rise to the point where they will want to consume $200 montblanc pens?  seems like a silly strategy to me. from what i have read (didn’t confirm this while in shanghai) middle class earners, ridiculously defined by the government as income of 7-75k, spend their disposable income on real estate. the massive flood of people from the countryside throughout this economic boom has made owning urban real estate a homerun over the past 20 years. the government has even had to put in restrictions on the amount of properties the locals can buy.  seems to me that the real estate trade can only be supported by ever more rural chinese migrants flocking to urban areas but many suspect this large urban push has already happened. and now wages are rising as fewer ruralites flee to the cities while factories are in need of labor. and what do you think happens once these employees demand healthcare or a minimum wage or something as ludicrous as safe working conditions? so where to invest? buy apple stock. anyone that has enough money to eat and not worry about 2 weeks from now is trying to buy the greatest status symbol they can, namely an iphone 4s. outside the apple store in beijing you will find numerous folks selling iphones for over $1000 since the store is sold out. next, invest in lamborghini or some other uber high end product, perhaps even the diamond interest de beers (if you think engagement rings will catch on) and short any mid level retailer that has pegged their hopes on china.  the uber rich will pay 3x normal prices to own things that signify that they are just that "uber rich". any brand that relies on a tag that can be copied may be in trouble with the ferocity of this knockoff industry. also i don't know what the next cheapest manufacturing country is but they are looking like a better alternative than china with each passing day as input costs rise, vietnam perhaps?  and lastly buy america. we rock. we innovate and we drive what they are copying in china. apple, starbucks, mcdonalds, ibm, caterpillar, gm to name just a few. if we build it they will come.