Photo Credit:twocentsmore
Feedback from financial advisors in our network continues to support the conclusion that China's economic expansion and financial markets remain in high growth mode.
Most financial advisors in our network believe that China's ability to manufacture or assemble goods at a low cost basis in a highly competitive economy is key to future growth. High personal and household savings rates--and China's self-reliant attitude--help investors to separate what China's outstanding debt means to the country's future.
Financial advisors here are still worried about China. The government's tight control of information isn't like our own constant flow of orderly and audited information. Accounting problems, when discerned, get the attention of short sellers. Sino Forest Corporation lost almost $6 billion of its capitalization as short sellers traded on the company's bad accounting practices in Q1 to Q2 2011. China's officials responded to short sellers by publishing "Measures for the Administration of Margin Trading and Short Sale of Securities of Securities Companies" in October 2011.
Other regulations regarding stock index futures' concerns and downward trading pressure is reflected in the government's May 2011 publication of "Rules Regarding Stock Index Futures" by China's Securities Regulatory Commission. The report provides guidelines for the use of stock index futures use by Qualified Foreign Institutional Investors.
Comments
The last two decades in China brought an expansion in economic power so broad and sustained that it generated a second industrial revolution in the country and transformed the nation from a regional agrarian economy into to a world manufacturing power. China is continuing to roll along at high speed, but it must be controlled.