Featured Content

An Important Message from Michael Lombardi:

An Important Message from Michael Lombardi:

I've identified six time-proven indicators that now all point to a stock market crash in 2015. You can see my latest video, Six Time-Proven Indicators Now All Pointing to a 2015 Stock Market Crash, which spells out why we're headed for a crash and what you can do to protect yourself and even profit from it, when you click here now.

Why the Great Wall of China’s Still Standing

By

eurozoneThe Great Wall of China is not crumbling down as some are starting to suggest following news that Chinese premier Wen Jiabao cut the country’s gross domestic product (GDP) target to an eight-year low of 7.5% for 2012. As I have said in previous commentary, China is stalling and clearly impacted by the debt and muted growth in Europe, particularly the eurozone, but the country is not in a downward spiral, as 7.5% growth is comparatively good. GDP growth in the Chinese economy could plummet to as low as 6.8% in 2012 should the growth situation in Europe and theU.S. falter, according to the Asian Development Bank.

What makes me confident is thatChinawill now spend big-time with new stimulus to make sure the country’s economy avoids a hard landing, which would be quite negative. As long asChinacan cap its inflation at the official four-percent target, added stimulus will be fine. In my view, the lower rate of growth is positive, as the inflation inChinahas also steadily declined to more manageable levels. The country’s consumer price index (CPI) came in at 4.5% in January, down from 6.5% in July, representing five straight months of monthly declines in inflation.

China is aiming for “higher-quality development over a longer period of time” and will keep its current “proactive” fiscal and “prudent” monetary program in place, said Wen.

 The county wants to avoid a hard landing and halt the slide in GDP growth by initially pumping over $540 million into its banking system for new loans. China has reduced the bank reserve requirement that will allow increased loans to businesses and consumers, which will help to drive the Chinese economy.

 China’s policymakers will also cut the income tax paid by companies along with the import duties on energy and raw materials in an effort to drive domestic consumption.

 In addition, the added stimulus will include more funds available for key consumer spending areas, such as education, health and other services aimed to increase the disposable income available for consumers to spend on goods and services.

 Any impact on the Chinese economy could send shock waves around the world. The Chinese economy, which had been charging ahead on all cylinders and becoming the envy of the world, is showing some growth pains that could hamper the country’s rate of growth.

 The problem is that the global demand for cheaper-made Chinese goods has been on the decline. Part of the reason for this is that other industrialized countries are looking at driving domestic employment by protecting local manufacturing and this would negatively impact China. For this reason, the Chinese want to stimulate domestic demand for its goods.

 While the current market risk regarding Chinese stocks is extremely high as the threat of global slowing continues, I still like the future for China as an economic powerhouse, but we need to get past the near-term hurdles.

 Stocks are facing tough chart resistance and I feel the risk of a near-term downside move has increased given the Greek and eurozone risk. You can read my thoughts in Stocks at Multi-year Highs, But Watch For Some Near-term Topping.

Premium Content

Secret "New Swiss Bank Account" Safest Way to 44% Returns

Secret

It's the safest—but, until now, completely ignored—place for your money. Because these elite "bank accounts" pay guaranteed 5% cash payments per annum on top of returns on capital exceeding 44%... Learn all about them here.

About the Author, Browse George Leong's Articles

George Leong is a senior editor at Lombardi Financial. He has been involved in analyzing the stock markets for two decades, employing both fundamental and technical analysis. His overall market timing and trading knowledge are extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi Financial’s popular financial newsletters, including Red-Hot Small-Caps, Lombardi’s Special Situations, Judgment Day Profit Letter, Pennies to Millions, and 100% Letter. He is also the editor-in-chief of a... Read Full Bio »

Exclusive profit Confidential Presentation

Stocks that Double in Two Days No Matter What the Market Is Doing?

Stocks that Double in Two Days No Matter What the Market Is Doing?

We picked SafePay Solutions stock and it jumped 142% in two days. We then picked China 3C Group stock and it went up 103% in two days. To learn more about our stocks that double in two days, see them here now.

×