Kemiao Garment Hldg Group (KMGH)

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Investors should keep the slower growth rates in context. GDP growth of 7% is significantly slower than 10%, but because of the larger base, that 7% will deliver far larger incremental expansion of the economy than 10% a decade ago, meaning greater opportunity for investors. And, 7% is still 7%! U.S. GDP rose 2.4% last year.

Many parts of the economy are clearly still doing well. While traveling in China last week, I heard from small private manufacturers who told me they were planning to raise wages by 5% to 8% this year. Income growth of 8% compares favorably to 3.2% growth in the U.S., as does Chinese retail sales growth of 10.8% vs. 3% in the U.S. The number of new business registrations in China rose 38% in 1Q.

Understanding why China is slowing, and the long-term benefits of the restructuring policies that are contributing to that slowdown, is important to understanding China’s impact on the global economy, and on an investor’s portfolio. ;)