CHINA VS. UNITED STATES

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United States versus China

US Debt Burdens

Large and Growing

• US has debt close to 90% of

GDP

• Off balance sheet obligations

of Social Security and

healthcare could be larger

than $14 trillion debt

• US attitudes toward debt are

excessive

• So, US debt could be 2X GDP

China Government

Finances are Strong

• Total government debt is

much less than US – estimates

around 40% of GDP

• Average Chinese citizen

avoids debt

• Foreign Exchange Reserves

are over $3 trillion

• China has flexibility

Incentives for Entrepreneurs are High

• High rewards and much wealth are there for those who

take risk in growing capital.

• Government policy encourages capital investment.

• Tax policy is favorable for investment.

• Infrastructure costs are low in China.

• Cost structure still very favorable for all businesses to

move operations to China. Two reasons:

1. Lower costs

2. Enlarge potential markets

China and Many Other Emerging Markets

Favorable for Capital Growth

• Over past ten years, Emerging Markets outperformed

developed markets by 10% per year.

• We anticipate this to continue once money comes back to

equity markets.

• China will eventually open up its currency, and this will

help China grow – fully convertible currency.

• China continues to take advantage of global

opportunities – buying in Brazil, Greece, and other

troubled areas.

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6% of 2000 EM population, growing to 22% in 2020

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