Fleet Street Letter’s Ben Traynor says China’s domestic market will insulate the economy from a fall in demand for its exports. Strong local consumer and investor confidence undermine the theory that China will be shot down by the global downturn. Ben says this is good news for Western investors looking for growth while their local economies stagnate.

Received wisdom has it that China will be dragged down by the other major world economies. But let’s not be so hasty. The signs are that there’s still plenty of life left in the Dragon. And that’s not just good news for China — it’s great news for western investors looking for growth.

The first part of the “China will suffer too” story went a bit like this: as western economies slowed, they would curb their demand for Chinese imports. As a result, China’s export engine would stall, undermining its economic growth story. Fair enough as far it goes — a similar fate has befallen Germany.

Indeed, China’s exports have been hit. For the period January to July, China’s trade surplus fell 9.6%. But there are signs that the domestic economy is taking up the slack.

Retail sales in July showed growth of 23.3% year-on-year. That’s a record high. Meanwhile, China’s urban fixed-asset investment in the first half of the year was 27.3% higher than a year earlier.

It all suggests a big difference between China’s economy and those of Britain, Europe and the US. A difference that can be summed up in one word — confidence.

That’s not to say China will continue to post record growth rates. There probably will be a slowdown — but a slowdown in China, with its double-digit growth, still leaves room for some impressive figures.

“As the authorities appear to have now shifted their top priority from curbing inflation to fuelling economic growth, investors keen to enter the Chinese market have been given an injection of confidence,” says Sherman Chan of Moody’s Economy.com. “Investment will likely continue to grow at a breakneck pace.”

Zhu Baoliang, senior economist at the State Information Centre, adds this:

“Although export and trade surplus growth could continue to fall in the coming months and the economy is set to decline, the overall economy can still manage to grow at 10% this year.”

The bottom line is simple — despite the likelihood that its economy will weaken, there is still growth in China. China will continue to be a major global driver.

So how does this relate to you, as a private investor? Well, buying Chinese shares directly isn’t an easy option. Nor is it a very good one. Besides, China’s stock market is extremely volatile – and you’re at an informational disadvantage.

So what can you do? Well, some time ago my colleagues and I at The Fleet Street Letter published a report. It reveals how British investors can benefit from global economic growth even while our economy stalls. Without buying dodgy foreign shares traded on hot house markets.

That report is still available. And with Britain’s economy now officially at a standstill, it is more timely than ever.

Many readers have already obtained a copy. But if you’re yet to do so, I urge you to take a look at it now.

Read on to find out how you could continue to grow your portfolio despite the stagnation of the UK economy.

Source: Exports Fall, But There’s Plenty Of Life Left In China