Time to Short China?

It could be time to consider the ProShares UltraSh FTSE/Xinhua China 25 (NYSE:FXP)…  It seems that after celebrating its 60th anniversary, China may need to head back to work.  China could be in need of economy rebalancing since its economy is primarily comprised of exports and therefore does not show significant room for growth. Without help from the $14.2T U.S. economy, China may have a tough time maintaining rapid clip growth even one year from now.

FXP ProShares UltraSh FTSE/Xinhua China 25 seeks investment results that correspond to twice the inverse (opposite) of the performance of the FTSE/Xinhua China 25 Index.

William Pesek of Bloomberg had this to say today:  Among all the wildly photogenic moments in Beijing, the red miniskirts were a standout from the missiles, the tanks and the giant fish.

The legions of female militia clad in minis, white jackboots and submachine guns last week seemed especially incongruous under Mao Zedong’s gaze. His portrait, which hangs over Tiananmen Square, can make one feel like it’s Oct. 1, 1949. It was then and there that he declared victory in a civil war.

China’s 60th anniversary spectacle left little doubt that Mao jackets are out, Gucci is in. Well, perhaps not the firearm accessories. Yet if the 2008 Beijing Olympics didn’t do the trick, China’s immense and flawless bash left no doubt about its ever-growing claim to global influence.

Just don’t let the show distract you from the daunting list of things China must pull off in order to thrive. It includes finding a new growth model, raising hundreds of millions more out of poverty, getting the state out of the economy, attacking corruption, saving the environment and figuring out what to do with more than $2 trillion of currency reserves.

Before we get into why China’s next 10 years will be far more challenging than the last 10, let’s accentuate the positive. Of all the factoids that impress economists, China’s success in raising 300 million citizens out of abject poverty leaps out. For all the potential that investors see in India, China is doing a far better job of improving living standards.

Surpassing Japan

The Chinese government knows the importance of infrastructure. China’s high-speed rail networks put the U.S. to shame. So does the nation’s success in building first-world roads, airports and power grids. The pace at which China is overtaking Japan is as impressive as it is unnerving to officials in Tokyo. It may surpass Japan as early as next year to become the second-biggest economy.

Goldman Sachs Group Inc. predicts China may surpass the U.S. by… [Read the rest of the story]