Thanks to Beijing’s recent $586 billion stimulus attempt, the country is growing at a pace that is stomping the rest of the economically depressed world.

Instead of following Bernanke and Geithner’s plans to revive the economy through monetary policy, China is following a purely fiscal strategy. With a fixed currency and a slew of massive state-owned corporations, spending easy money is about all the country can do.

The recovery plan starts with the country’s lenders, Instead of sending money to the banks, giving them the decision to loan it out or pad their balance sheets, China is getting rid of any choice.

A bubble in the making

After loaning $97 billion in May, the banks doubled the figure in June, handing out another $220 billion in loans. So far this year, the nation’s banks have lent over $1 trillion dollars to its companies and citizens.

Is it working? So far, so good.

Currently, China’s main bank expects to record annualized growth for the current quarter of 7.5%, with the year’s official goal of 8% well within striking range.

But we all know China’s growth figures are anything but reliable. For a better measurement, we need to look at something a bit more tangible… like car sales.

This is where things get interesting.

Last month turned out to be a banner month to sell new cars in China, with sales surging more than 36% over the same period last year. Overall, 1.14 million vehicles were sold within the country, with 872,900 of them classified as passenger cars.

During the same period, American dealers managed to unload just 859,847 vehicles last month.

On a six-month basis, China’s sales superiority is obvious. American’s bought just 4.8 million vehicles as we closely awaited Detroit bankruptcies. Meanwhile, our Chinese trade partners bought 6.1 million cars, up 17% from last year.

Make money wherever you can

This is an important trend for investors to be aware of.

As Beijing pours more and more money into its economy, it is building a wider and wider economic moat around its borders.

The wider its moat, the less dependent it will become on exporting widgets to American buyers. With 1.3 billion people calling the country home, China will have plenty of buyers within its own borders.

For American investors, this means a change in investment theory. With a lending-induced bubble quickly growing to North American proportions, investors have an opportunity to take advantage of the quick, but likely unsustainable, growth.

If you have read my work lately, you know the commodities market is one way to play the action.

Another way is through any of the publicly traded major infrastructure players like China Architectural Engineering (NYSE:CAEI) or if you are into the smaller players, Qiao Xing Mobile Communication (NYSE:QXM).

Whether the current spending level and economic growth is sustainable is not the question. What is important is that China gives investors a shot at one of the quickest growing economies on the planet.

While the U.S. is treading water politically and economically, China is moving forward. It will do it whether you are onboard or not.

Source:The Debate is Over. China Wins!

We’ve been cautioning readers against expecting any near-term returns in China under the current economic malaise. With unemployment at record highs, a 100-year drought crippling agriculture and exports at a mere trickle, China is not the place to be right now.

But looking out on the horizon, we wonder if China should be your primary investment destination for potential long-term returns.

Car data for January 2009 certainly suggests a strong bias toward China.

The China Association of Automobile Manufacturers said Tuesday that 735,000 vehicles were sold in China in January. That surpassed the 656,976 vehicles sold in the U.S. the same month.

While car sales slowed in China along with most other countries, U.S. sales plunged 37% in January to a 26-year low. Meanwhile, vehicle sales in China dropped 14.4% from a monthly record 860,000 in January 2008.

January sales were 0.8 percent below those in December, and below the 790,000 some analysts had anticipated.

Last week, Mike DiGiovanni, General Motors Corp.’s (GM) executive director of global market and industry analysis, forecast that China’s car sales could hit 10.7 million vehicles in 2009, more than his estimate of 9.8 million unit sales in the U.S.

China is certainly a major market for G.M. but the company is also losing market there. In October 2008, Toyota (TM) beat out G.M.’s Chinese venture as the number-two auto maker in China for the first nine months of the year. VW/Audi holds the coveted top spot in China.

If you’re interested in securing your financial future, you may want to contact your broker about ETFs and other funds based on Chinese equities.

A spate of interest rate decisions, including that of the European Central Bank on Thursday, are set to influence the currency markets, and key U.S. non-farm payrolls numbers will be released on Friday.

Spot gold slipped to $773.05/775.05 an ounce at 1000 GMT from $781.50 an ounce in New York late on Tuesday.

“This is a big week for news, and a lot of people will be on the sidelines ahead of that,” Afshin Nabavi, head of trading at MKS Finance, said. “This is going to be a very illiquid market.”

Gold is often bought as an alternative investment to the dollar and typically moves in the opposite direction to the U.S. currency. The dollar strengthened against the euro on Wednesday as traders bet on a euro zone rate cut.

The currency markets remain jittery ahead of rate announcements from the ECB, the Bank of England and the Reserve Bank of New Zealand on Thursday.

Gold shrugged off a move higher in oil prices, with inflation fears tempered by crude’s sharp dip at the beginning of this week.

U.S. crude futures are currently up on the day, but are trading some 13 percent below the level they hit early on Monday. Traders are awaiting U.S. stockpiles data due later in the session.

Physical offtake of gold is also slowing, traders said. In India, the world’s largest bullion market, domestic gold buying declined as well-stocked traders awaited further price falls.

“We have many buy orders at $750 (an ounce) levels,” a dealer at a Mumbai bank said.

Among other precious metals, spot silver tracked gold lower to $9.38/9.46 an ounce from $9.54.

CAR SALES TUMBLE

Platinum prices rose, recovering some of this week’s up to 10 percent losses. The metal slipped sharply on fears over falling sales by automakers, the main consumers of platinum used to make autocatalysts.

Data released on Tuesday showed U.S. car sales tumbled nearly 37 percent in November, the 13th consecutive month of falls, to their lowest level since 1982.

Sales at GM and Chrysler fell 41 percent and 47 percent respectively in November. Carmakers said there was no sign demand would rebound in the next six months.

However, with platinum having already fallen two-thirds from the highs it hit in March and much of the bad news already priced in, the market showed little reaction to the news.

“The platinum group metals market has come to expect the worse, and much of this bearish news has been priced in already,” Standard Bank analyst Walter de Wet said.

A top lawmaker predicted Washington will approve a bailout plan for U.S. automakers after they submitted survival plans to Congress, and both GM and Chrysler said they needed an immediate cash injection to avoid failure.

Spot platinum rose to $803.50/823.50 an ounce from $796 late on Friday, while its sister metal palladium was little changed at $171/176 an ounce against $169.

A Reuters survey showed platinum, palladium and silver are expected to record sharp price falls in 2009 as demand sags in line with economic growth.

By Jan Harvey
LONDON, Dec 3 (Reuters)