Say what you will about President Donald Trump – he's certainly been consistent on China.
During the 2016 campaign, he repeatedly promised to slash our trade deficit with the world's most populous nation. Last week, he said the goal is to cut that $375 billion yearly shortfall by as much as $100 billion.
This explains three moves he has made recently…
- The first are the president's 25% tariffs on imported steel, most of which comes from China. We went over those a couple of weeks ago.
- The second occurred earlier this month when the White House blocked Singapore-based Broadcom Ltd. (Nasdaq: AVGO)'s proposed $117 billion acquisition of Qualcomm Inc. (Nasdaq: QCOM), the wireless chip leader based in San Diego.
- Then, late last week, President Trump signed an executive memorandum that would impose retaliatory tariffs on up to $60 billion in Chinese imports to punish Beijing for stealing American companies' intellectual property.
These three big moves have many on Wall Street doubting the wisdom of investing in any Chinese tech stocks in the current climate.
First off, all the media "noise" around tariffs and trade wars doesn't match the reality of the situation… the "signal" – which is that Trump's tough talk has gotten China and others to the negotiating table.
We've already gotten concessions from South Korea – and I bet Beijing will be close behind.
So, while others flee in fear, I've identified five Chinese tech leaders that I think will benefit – not despite Trump's moves… but because of them.
Today I'm going to show you why the time to act is now and how you can make big money doing so…
The World's Largest – and Pulling Away
China's e-commerce sector, which surpassed our own to become the world's largest in 2013, now accounts for more than $1 trillion in yearly sales, according to eMarketer. That's nearly twice as large as the U.S. e-commerce market.
And that booming e-commerce market will continue to grow – eMarketer predicts it will more than double to $2.66 trillion by 2021.
Of course, the rapid growth in smartphone use is a key factor. There are now 663 million of these e-commerce enabling devices in China, says Statista.com. Currently 46.8% of Chinese people shop online, and Statista says that 67% of those folks will be by 2022.
And mobile-based spending now accounts for half of all of China's e-commerce, says eMarketer. That compares to just 22% here in the United States.
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Moreover, we can't ignore the fact that the world economy is shifting, with the nexus of global trade moving from the United States to China. Back in 1985 – when the global economy was worth $19 trillion in "real" terms – North America, Western Europe, and Japan accounted for two-thirds of all global growth. Back then, China and the rest of Asia accounted for 18%.
This scenario has totally reversed. Now, two-thirds of "real GDP" ($114 trillion) is due to China and Asia – while the former Big Three account for 29% of what the world produces.
This growth in e-commerce is coming as China shifts away from its focus on exports and places a greater emphasis on domestic spending. In other words, China's government is pulling out the stops to make its economy grow internally.
That's a savvy move for two big reasons:
- It helps make sure that Chinese firms swing for the fences.
- Firms operating mostly domestically will be immune from tariffs.
That's all great news for these Chinese e-commerce profit plays that are tapping the lucrative convergence of mobile, cloud computing, and e-commerce.
All five have solid potential to double in value over the next three years.
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.