Chinese growth continues to surpass old economic powers Go compare with our comparison table

Chinese growth continues to surpass old economic powers

20 August 2010 / by Paul Dicken

Continued growth in China for the second quarter of 2010 may encourage investors to return to emerging markets as a source of returns.

Nominal Gross Domestic Product (GDP) figures for the second quarter published by the Japanese government put Japanese output at $1.29 trillion compared to higher GDP in China at $1.34 trillion.

The figures have prompted commentators to predict that China, a high-flyer of the emerging markets, will overtake Japan as the world’s second biggest economy when full figures are published for 2010.

Paul Niven, head of asset allocation at F&C Investments, said the USA remained the world’s biggest economy but China was expected to overtake the USA by 2030.

During the past decade China and India have overtaken Germany and the UK as the third and fourth biggest global economies. The signs of continued growth in China may raise confidence about newly established markets as a area for investment.
 
The Organisation for Economic Development and Co-operation also published GDP statistics for the seven developed economies in the OECD, showing record growth of 2.2% in Germany for the second quarter of 2010. The OECD said this was the highest growth - compared to the previous quarter - since reunification in the country.

The German central bank, the Bundesbank has revised its growth forecast for 2010 up to 3%.

The rate of GDP growth in Japan slowed by 0.1% between April and June, and Niven said China’s stock market capitalisation may also surpass that of Japan.

“This has happened before, in both 2008 and 2009 but, at present levels there is about 10% gap between the overall market value of Japanese and Chinese stocks,” he said.

Some of the future risks identified for China include the low level of domestic consumption which has been on a declining trend.

Aruna Karunathilake, fund manager at Fidelity, said he would encourage people to think of China as a very long-term trend.

“The government is starting to actively encourage consumption as it realises that relying on the over-leveraged OECD consumer as the hub of its export led economic policy may not be the best long-term approach,” he said.

Karunathilake said investors can discover emerging trends by looking beyond Beijing to other regions of China.

© Fair Investment Company Ltd

 Product NameISA OptionIncome YieldMore Info
Income Maximiseryes
See Details
More Info >
Seeks to achieve a target yield of 7% to generate a quarterly income, whilst offering the potential for some long-term capital growth. Save 100% on Initial Charges.
Monthly Income Plus Fundyes
See Details
More Info >
Popular monthly income fund that aims to achieve a high level of income whilst seeking to maximise total return through investing in high yielding corporate and Government bonds, together with UK equities. 100% discount on initial charges.
Click here to view latest Fund Facts »
Strategic Bondyes
See Details
More Info >
Investing in higher yielding assets which will include most types of fixed interest securities, this fund aims to deliver a quarterly income to investors. Save up to 97% on Initial Charges.
Invesco Perpetual Corporate Bond Fundyes
See Details
More Info >
This highly popular investment fund aims to achieve a high level of overall return with relative security to capital. Income Paid to you twice yearly. Up to a 100% Discount off the Standard Initial Fund Charge.
Click here to view latest Fund Facts »
Artemis Income Fundyes
See Details
More Info >
One of the leading UK Equity Income Funds. The Fund managers hunt out companies with strong free cash flow and solid balance sheets. Income is paid to you twice yearly. 100% Discount off the Standard Initial Fund Charge.
Click here to view latest Fund Facts »
Invesco Perpetual High Income Fundyes
See Details
More Info >
One of the UK's most popular income funds, the Invesco Perpetual High Income has delivered consistently good long term returns through a variety of market conditions. Income is paid to you twice yearly. Up to a 100% Discount off the Standard Initial Fund Charge.
Click here to view latest Fund Facts »
M&G Corporate Bond Fundyes
See Details
More Info >
The M&G Corporate Bond Fund is a conservative ‘blue chip’ sterling fund that aims to produce a higher return than UK government bonds. Income is Paid to you Quarterly. 100% Discount off the Standard Initial Fund Charge.
Jupiter Merlin Income Portfolioyes
See Details
More Info >
The Jupiter Merlin Income Portfolio fund aims to achieve a high and rising income with some potential for capital growth. Income Distributions are made to you quarterly. 95% Discount off the Standard Initial Charge.
Click here to view latest Fund Facts »
The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.