Why I become to believe China will have a brilliant future

I used to be pessimistic about the future of China. I thought the government was inefficient and officials were all corruptive. Since late of 2006, through information from all kind of media, Jim Rogers' books and Steven N.s. Cheung's blog, I have believed that China will have a brilliant future.

Jim Rogers travelled around the world two times, he knows the ecnomics of over 100 countries; his believing in China cannot be wrong so easily. Professor Cheung, grew up in China, studied and worked in the US for years. He is a wise and rational ecnomist; I also do not think he can mistake on such problems. As a Chinese, Professor Cheung said he can write 3 books on criticising China's dark side, however, he admitted that Beijing must have done things quite correctly, otherwise, China cannot make such a historic progress in past 30 years. Charlie Munger, Warren Buffett's partner, the vice president of Berkhire Hathaway, said to those who resist Beijing Olympic early this year :" To ask yourself, does China become better or worse in these years?"

Moreover, I find that talent and wise people become to be in the right places in this country; the Mckinsey report How corporate China is evolving display this.

So, why China should not have a brilliant future?

Invest crazy real market in China

While the US real market falling into the valley in past 15 years, Chinese real market keeps on rising. When the government declared the state would no longer provide low-rent appartment for its citizens, the real market is destined to roar for a long time; we must understand that no land in this country is privately owned by anybody.

The land namely belongs to the state; but actually to the governmental high officials. House owners have only the very limited right to live on the land, where their houses are, for no longer than 70 years. According to the law, the government can take back the land any time (even in the 70 years) . Only the government has the right to sell land to real development companies; this means the local governments and high officials have the chance to make monery for themselves with this privilege. You can image not every company has the chance to get land no matter how qualified the company is.

The real market in China is far away from the market economic. This market is monopolized by the governmental high officials and real companies with special background. Wanna be special? It is not as difficult as before, as long as you have enough money and know how to use the money to get land.

The people in Chinese cities have complained for high house price for quite a long time. Meanwhile, the centeral government has kept on issue real regulations and laws to control the crazy house price. I have been never believed in what the central government has done. The fact is the people need houses, but the government is always trying to beat the hourse providing.

Also the government tries to persuade the people to give up the idea to own a hourse or an apartment. Yongtu Long, a high central governmental official, said he had not owned a house until 58 years old; he might have forgot that before he was 58 years old, no houses or apartments sold in China.

The central government always heads for south if it plans to reach north. I firmly believe the house price will not drops unless the land private ownership is realized.

As the best and biggest real company, Vanke occupies only 1% of the whole market. So, come to China for the tempting real and make a big fortune! Do not mind the special money cost, every penny of which is absolutely worth.

Will Chinese Benefit from RMB Appreciation?

RMB appreciation or not, this is a problem. According to natural rules in economics and the interest of the US, I agree that RMB appreciation should be necessary. The government cannot always disobey the basic rules, no matter how powerful it is. Foreign investors may be excited on talking RMB appreciation; however, for ordinary Chinese people it might not be a good news.

I do not care for the affection of RMB appreciation on Chinese export trading, instead, let us take a look at the changes in ordinary Chinese life. In Wuhan, the biggest city in central China, with the population of over 850 million, food price has increased 25% in average since this August when China government began to speed up the appreciation of RMB; the price for egg even become 2 times that of in July. However, the average income increase only 0 - 3%; more than half employee cannot get a compensation in salary as the increasing of laid-off workers. Also, the prices of electricity, water and gas keep on rising national wide including in Wuhan this year. In spite of the government regulation on real market, the average price of apartments in all Chinese cities except Shanghai continue rising up. That is the life the ordinary Chinese should be faced in front of RMB appreciation.

I still admit that RMB appreciation is correct; the problem lies in the government financial policies. RMB cannot be exchanged freely for ordinary Chinese and the government insists on GDP increasing depending on export rather than domestic consumption. Now who should take the responsibility ? Again the whole Chinese people?