Here are some notes I took from a presentation by Don Straszheim, a distinguished economist, now vice-chairman of Roth Capital Partners.
Is China’s growth sustainable? Straszheim noted that inflation is not accelerating, as would be the case if demand were outpacing capacity. (The IMF’s recent economic outlook shows inflation of 1.5 percent last year, forecast to increase to 2.2 percent this year.)
Politics: Top of mind for people is not “I want to vote.” Top of mind is “Let’s make money.” The state is still the dominant player, through state-owned enterprises (and I think he meant to add “and regulation.”)
Environment: clean coal is a must. They’ve got lots of coal, and environmental improvement is a very high priority. Nuclear energy usage will increase significantly, but won’t be able to accommodate all the increase in energy demand. Environmental services may be the biggest investment play of all in China.
Foreign Exchange: China will shift priority from buying U.S. treasury bonds to foreign direct investment outside of China.