ETF Trends
ETF Trends

After a year of aggressive stimulus measures, China’s economy, along with related exchange traded funds (ETFs),  seem to have come out of the financial crisis better than many other countries. But there are some minor issues that need resolving.

The joblessness attributed to the weakened export-oriented industries has been supplemented by job opportunities in infrastructure-related employment, writes Ted Plafker for The New York Times. Exports dropped 22% in the first half of 2009 compared to the same period last year. (How to capture China’s growth).

How can China right itself?

  • While many believe Chinese growth is poised to come out around 8% this year, the country needs to fix its dependency on exports and fixed-asset investment, and start increasing domestic consumption in the long run.
  • Some argue that widespread change won’t occur until fundamental reforms like a liberalization of the labor market and financial services take place. (Play Russia and China’s gas deal).
  • In an attempt to quickly fix the economy, the government overlooked the struggling small- and medium-sized companies, which number around 60 million and provide half of China’s tax revenues, two thirds of total exports and three quarters of new jobs. Only the well-connected larger companies were able to get the quick cash fix needed. (Is China in a bubble?)
  • John Frisbee from the U.S.-China Business Council believes China is expanding its industry domain into other sectors not previously associated with “made in China.”
  • According to Steve Henn for Marketplace, China Investment Corp. has been on a buying spree, picking up mines and energy companies around the world. Philip Levy, an economist at American Enterprise Institute, says China is worried about its lack of natural resources.

For more information on China, visit our China category.

  • iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI): up 52.4% year-to-date

ETF FXI

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.