George Leong writes: We are at a major point in the history of China as the country gets ready to welcome its new leadership group that will dictate what China does, especially with its economic growth, for the next decade. Moreover, it will be critical for President Obama to establish a stronger relationship with whomever will run China during his second term in office, as it could set up how the world looks in 10 years.

The world’s two top economies have similar economic growth goals: to expand their economies, drive income levels higher, and push consumer spending.

The 18th National Congress of the Communist Party of China, which began yesterday. will set in motion the transfer of power in the communist party that occurs every 10 years. There is yet to be an announcement on the new appointments, but the good money is betting on Xi Jinping, the vice-president of China, becoming the next president, replacing Hu Jintao. Li Keqiang, the vice-premier, will then become the next premier, replacing Wen Jiabao.

Already there are questions regarding what type of people the new leaders will be. The consensus is that the relative youth and moderate stance of Xi Jinping and Li Keqiang could make China more in tune with the modern world, which could see the development of better relationships with its key trading partners, including the United States, and could drive economic growth.

For China, the change at the helm comes at a critical juncture, as the country is currently facing stalling economic growth following years of explosive gross domestic product (GDP) growth that propelled the country to overtake Japan as the world’s second-largest economy.

China may be ready to take the next major step toward eventually becoming the world’s biggest economy, with surging economic growth and rising political clout. The country is the world’s top manufacturing power and is becoming the world’s major buyer and user of resources in a move to drive economic growth.

Soon to be ex-President Hu Jintao reiterated his grand goal for China to double its 2010 GDP by 2020, while making sure its citizens’ income levels also double. (Source: “China talks reform as transition begins,”Yahoo! Finance via CNNMoney, November 8, 2012.) The desire to raise income levels is not a surprise, as the country has long wanted to increase consumer spending to drive economic growth and rely less on export demand.

For America, the key will be to partake in what is expected to be a booming next seven to ten years of economic growth for China.

President Obama needs to walk a fine line to try to benefit from China’s upcoming golden years of economic growth, as I feel he will. While the question of currency valuation of the yuan needs to continue to be addressed, Obama has to avoid being accusatory toward the Chinese, as the culture is based largely on protocols, respect, and honor. We need to get jobs back to America, but the truth is that companies will continue to manufacture in the lower-cost centers, and I do not expect this to change.

Ultimately, if President Obama is open and non-confrontational, America will benefit, as a richer China also means more wealth to Americans.

Source: http://www.investmentcontrarians.com/stock-market...

By George Leong, BA, B. Comm.
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

Copyright © 2012 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.