Shanghai Trumps New York
During my high-speed tour of China it has been impossible to ignore the contrast between America's slump and China's ongoing boom. Everywhere from Hong Kong to Beijing, the signs of growth are simply impossible to miss. Construction cranes dot every skyline, and city stores and streets are jammed.
Obviously China is the right place for investors seeking capital appreciation in today's economy. Just take a closer look at the bustling city of Shanghai which hopes to challenge New York as the world financial capital. The numbers are stunning.
Retail sales in the city continue to boom, jumping 12.4 percent in May to 43.4 billion yuan or $6.34 billion! Fixed asset investment (FIA), which includes spending on bridges, tunnels and other infrastructure projects, has jumped by 7.8 percent from a year ago to 165.4 billion yuan. That's $24.2 billion of investment in this one bustling Chinese city alone!
Beijing's massive stimulus plan, announced just last November, is already showing major results here in Shanghai. The rate of increase in urban infrastructure spending shot up by 18.5% during the first five months of this year. Talk about "shovel ready!" Construction projects are everywhere, and the people of Shanghai are preoccupied with ongoing economic growth, hoping to become the world's primary financial capital.
Even the restaurant industry is booming here. Statistics confirm that spending in the "catering" industry has jumped by 13.6 percent from a year ago. That might seem like a minor indicator, but statistics on what the Chinese call catering provide a glimpse of the sense of optimism in a city which enthusiastically embraces socializing and spending big money in restaurants.
Has all of this demand created an inflationary bubble? Not in Shanghai. The city's consumer price index is off 1.2% from last year. Food and appliance prices are the only categories that have risen this year due to increasing demand. Prices for transportation, communications and health care are all easing slightly.
The familiar bellwether of the U.S. economy, housing, is one of the biggest growth sectors in this sprawling metropolis. Chinese banks in Shanghai extended $1.15 billion in new individual housing loans in May, the biggest monthly jump in 4 years. The surge in housing loans indicates that home buyers are increasingly optimistic according to one of the city's biggest lenders, the Bank of Communications.
The Shanghai Uwin Real Estate Information Service predicts that the volume of new home sales will likely continue to grow through June because the second quarter of the year usually is the traditional peak season for property sales.
Of course, A shares on the Shanghai stock Exchange are also booming as we have reported in the China Stock Digest. The recovery on New York's stock exchanges this year has been dwarfed by Shanghai's exploding growth. Seeing the hustle and bustle of China with my own eyes, just strengthens my belief that China will lead the rest of the world out of the economic downturn.
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