The US Recession, China, and You

It would be most unusual if you did not buy anything from or sell to China. You may not always be aware of which country owns your favorite brands. Some top American names are now effectively controlled by China. The country acquires controlling stocks frequently. When will the dollar stop depreciating? You are fortunate if you know the answer to that million RMB question. However, a secular implication is that US stocks get effectively cheaper for China all the time. There is hardly any place left to stash dollar reserves. It is already the same with the Euro.

China did not cause the recession in the United States. However, it has to pay some of the price. It is a truism that 2008 GDP growth all over the world will be affected by the financial crisis in the United States. Planners in Beijing must have seen the writing on the wall. The Fed is also on the ball with Wall Street. What should you do?

Invest in the RMB. It is managed at least as well as professionally valued stock. Speculators and executives with criminal intents cannot eat in to RMB value. The RMB is diligently managed in the long term interests of common people. It is your best currency bet at this time.

Buy China stocks listed on any US stock exchange. That is a great way to protect your dollar holdings. You can use such stocks to meet emergency cash needs. They also have superior growth potentials. One of our sister web sites has regular picks of top China stocks: The ETF Route to Stock Market Gains in China

Finally, expand your trade and business links with China. You are likely to get better values for everything you buy. China also offers large and growing vaults to absorb whatever you sell.

These are three specific suggestions on how you should deal with the equation between the US, China, and the 2008 recession.