Are you invested in China? According to this article, the Chinese economy isn’t exactly sound. If the author of the article, Minxin Pei, is correct, I don’t see how China would make a good long-term investment.
Systemic economic waste, bank lending practices, political patronage and the survival of a one-party state are inseparably intertwined in China. The party can no longer secure the loyalty of its 70 million members through ideological indoctrination; instead, it uses material perks and careers in government and state-owned enterprises (SOEs). That is why, after nearly 30 years of economic reform, the state still owns 56 per cent of the fixed capital stock. The unreformed core of the economy is the base of political patronage.
More than $900 billion is invested through the Chinese economy in bad (non-performing) loans. If you invest in China through mutual funds, your money is in the mix somewhere symbolically if not directly.
Updated August 9, 2011 and originally published May 9, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.