China’s Economy Is Undergoing A Huge Transformation That No One’s Talking About

Frank Holmes, CEO and chief investment officer of U.S. Global Investors believes, "misconception and exaggeration are circling China’s economy right now like a flock of hungry buzzards. If you listen only to the popular media, you might believe that the Asian giant is teetering on the brink of economic disaster, with the Shanghai Composite Index’s recent correction and devaluation of the renminbi held up as “proof.” But what gets hardly any coverage is that China’s economy is not weakening so much as it’s changing, like Beijing’s skies. Take a look at the two charts below, courtesy of BCA Research. You can see that the world’s second-largest economy has begun to shift away from manufacturing and more toward consumption and the service industries. While the country’s purchasing managers’ index (PMI) reading has been in contraction mode since March of this year, the service industries—which include financial services, insurance, entertainment, tourism and more—are ever-expanding. The problem is that the transformation has not been fast enough to offset the massive size of the manufacturing sector." To read more from Holmes on China (VIEW LINK)


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