The View From China: As it Continues to Change, China Offers a Growing Number of Profit Plays to Investors Who are Willing to Look

Money Morning Investment Director Keith Fitz-Gerald - an Asia investing expert - has been leading an investment trip through China, taking in that country's culture and scenery, as well as its investment opportunities. Here is Part VI - the final installment - of a short news series detailing his observations and discoveries.

By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report

IN THE AIR, ENROUTE FROM HONG KONG TO JAPAN - The fiery orange sunrise I see out my window is mesmerizing.

I'm always filled with awe over the dawn of a new day, especially during those long trips when sunrise jolts me awake from the kind of cramped, restless sleep familiar to travelers the world over.

On this day, however, I'm wide-awake. It's the start of the newest leg of my Asian adventure. I'm tucked into seat 11A, and am quickly lost in thought. I keep thinking about different parts of the 15-day investor trip I just finished leading through Mainland China and into Hong Kong.

In fact, we've been off the ground for only five minutes and already I find myself watching the landscape below, which is falling away by the minute as our jetliner climbs steeply out of Hong Kong's International Airport on its way to Japan.

After nearly a month apart, I'm certainly going to be glad to join my wife and kids at our home in Kyoto (we also live part of the year in Oregon). Even so, there's so much going on in China that I don't really want to leave, yet - not even for a minute.

As I look around the plane, I can't help but wonder if my fellow passengers feel that way about the Red Dragon. Most passengers are slouched in their seats, determined to ride out the fairly long flight. The other passengers appear oblivious to the economic miracle that I've spent two weeks studying. One guy has a magazine folded in his lap, while several are already asleep on those tiny things airlines refer to as "a pillow." One guy - an executive, from the look of him - has his hands resting across the tray that folds down out of the seat before him.

Here and there the bluish tint from a personal computer or iPod bathes the cabin like a landing beacon giving away those who can't or don't want to sleep.

When I think about all that I learned about in China - and all the things that I'm going to be telling you about here in Money Morning (and in our monthly sister publication, The Money Map Report) - I can hardly get more excited than I already am.

The Pathway to China Profits

Imagine landing in New York or Boston on the eve of the Industrial Revolution and you get the idea.

China is at once a land of contradictions and a contradiction in and of itself. It's also enormously complicated which is why even after I've spent 20 years in the Pacific Region, I feel like I've only scratched the surface.

The change China has undertaken is simply without precedent. And so is its government.

Contrary to what most Western investors believe, Beijing is growing stronger and wiser with each passing day - even as it continues to build upon the Communist pathway it established in 1949. It's also proven itself to be remarkably prescient and pragmatic, which is why China will travel a path all its own in the years to come.

And that's why China's future will be very different from its past.

I realize that's a hard pill for Westerners to swallow, but it's one that investors must accept in order to lock in long-term profits from China.

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The key, of course, isn't in latching onto a specific trend or direction in China, but rather in identifying investments with enough flexibility and profit potential to flourish from China-based trends.

There's a big difference between the two mindsets. The former - always looking for ways to invest directly in China - may lead to quicker, short-term profits. But the latter - looking for powerful trends and using them to profit from China - is much more robust, since it's capable of surviving the twists and turns that will inevitably take place along the way.

The Reality of the "New" China

After centuries of isolation and comparative solitude, China has re-entered the world economy with a bang. In the process, it's making itself over, shedding its identity as a Cold War-oriented power player, and evolving into one of the most efficient capitalist economies the world has ever seen.

And there's no turning back.

The prospect of a strong China clearly scares the dickens out of a good portion of America, particularly the "experts" who want to portray China as a long-term military problem. The reality here is that we are probably far better off in the long run working with China, than we are continuing to regard it as a Cold-War-type enemy. With such an enlightened philosophy, we could be investing with China in the Pacific Rim, rather than constantly figuring out how to defend against its military might.

But nothing happens quickly here. Not the airplane ride that brought me to China from the United States on the first day of my journey, and certainly not the type of U.S.-China alliance that I'm suggesting.

That means that no agreement will be reached overnight. There will be no single negotiation that "does the trick." Instead, it will take a series of negotiations - possibly over the course of several years - that will include trade talks, economic interaction and deals that build trust and understanding.

But it could all be very worthwhile. In reality, China may wind up not being our worst enemy, but our best friend.

News and Related Story Notes:

About the Author

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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