China Cuts Taxes, Spurs Growth.

China Cuts Taxes, Spurs Growth.

August 12, 2005

Big number from China today. July retail sales there +12.7%, after 12.9% in June. Restaurant sales +17.5%, according to a Bloomberg report, with clothing +16%, appliances +13.9%, furniture +16.9%, cosmetics +16.9%, telecom and mobile phones +21.4%.

What’s going on? The government cut taxes for 400 million farmers and raised the exemption level before paying income taxes. Sound familiar?

Big winners? Dell, Adidas, GM, and Wumart (that’s right, Wumart Stores).

American’s who think of China as a backward, Communist nation, need to take a closer look. The growing Chinese middle class and expanding technology sector are the real stories there.

I like to invest in China by placing chips on China’s principal vendors, including energy, technology, and money. That leads me to own EPP (Australia, New Zealand, Singapore, Hong Kong), and EWY (Korea).

JR

John Rutledge

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