Think China’s economic progress is bound to leave the United States in the dust? Perhaps Jim McTague‘s latest “D.C. Current” column in Barron’s will offer you a good reason to re-evaluate your assumptions.
Despite the success of China’s experiments in free-market capitalism, the top-cat communists running the show in Beijing can’t resist the temptation to engineer the economy. Their tinkering will increase in the next several years, according to Robert Hardy of Geostrat, a business-intelligence service that boasts clients in high places around the globe, including political and intelligence types in Washington, D.C. Pronouncements by Chinese leaders could provide clues to the Chinese stocks best poised to benefit.
The uptick in China’s central planning owes to the scheduled overhaul in the country’s leadership during the fall meeting of the 18th Communist Party Congress in Beijing. Seven of the nine members on the all-powerful Political Standing Committee of the Politburo will be replaced. During this transition, the leadership wants to assure domestic tranquility, especially since public disgust with official corruption is elevated. A healthy Chinese economy is the balm’s essential ingredient.
The leaders are apt to hand-pick companies that Hardy calls “economic champions” to improve life for the proletariat masses. On May 30, China’s cabinet publicly designated seven “strategic” industries from which the champions will be selected: energy conservation and environmental protection, information technology, biotechnology, advanced equipment manufacturing, new energy, new materials, and new energy vehicles.
Hardy says the champions are selected as much for political as economic reasons.
Now there’s a shocking conclusion.