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A Handy Guide to China’s Economic Slowdown
China’s high economic growth rates over the past few years are due in part to China’s aggressive policies on internal consumption and production. Raw materials produced in China, such as ores and agricultural products, have not been allocated to China’s general population, instead being delivered straight to Chinese factories for production and export. This will likely shift in the near future, the country works toward increasing local consumption. In fact, we may be witnessing the beginnings of the new Chinese economy - one focused on development and quality of life rather than pure mercantilism.
Nevertheless, growth in China is slowing, and if the once-per-decade election process ousts current leader Hu Jintao, there will be ripple effects in the global markets. Investors should be aware of how reduced demand for commodities could affect their holdings, especially in natural resources stocks and funds. China’s top imports include mineral fuel and oil, copper, ores and slag, optics, medical equipment, plastics, chemicals, vehicles, and iron and steel.
About the Author
Ben Warwick, Quantitative Equity Strategies
Veteran investment strategist Ben Warwick brings 20 years of investment management expertise to AdvisorOne.com in his blog, Searching for Alpha. His market and economic insights provide readers with an insider’s view on generating alpha through asset allocation, the use of strategic portfolio “tilts” and alternative investments.
Ben Warwick founded Quantitative Equity Strategies (QES) in 2002 as a platform for implementing his quantitative investment strategies. The firm manages assets with traditional long-only equity and fixed income, private equity, managed futures and alternative investment mandates. QES has developed an industry leading expertise in building investment programs that can replicate alternative returns, while offering daily liquidity and transparency. These products include the HFRq, a hedge fund replication strategy developed in concert with Hedge Fund Research in Chicago; the Managed Futures Beta Index, with Aspen Partners; and the Nomura QES Modeled Private Equity Returns Index (PERI), which was developed with Nomura Bank and Preqin, the leading source of information in the private equity industry.
He is the author of several books, including "Searching for Alpha: The Quest for Exceptional Investment Performance," (Wiley, 2000) and "The Handbook of Managed Futures," with Carl Peters, (McGraw-Hill, 1996). He can be reached at ben@qesinvest.com.
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