An Education on the Emerging Power: China

When it comes to financial trading there are certain rules that you must abide by. You must always do your research; know what you’re getting into. This is one of the key rules. At the Academy of Financial Trading we believe that knowledge is power. You have to know about the company that you are investing in. You have to know about the commodity itself. Only then can you make an informed decision. Only then can you make a wise assessment. However you also need to know about the outside influences.

Markets aren’t just influenced by companies. They’re influenced by real world events. If something catastrophic happens, it will affect prices. Just look at the US government shutdown. Not only did it shave billions off the American economy, it drove prices down. It affected currency values. You need to be aware of the world around you. That is why you have to know about China.

Whilst the US is still the world’s largest economy, it isn’t the world’s fastest growing. That label belongs to the world’s second largest economy, China. Once upon a time China was seen as a nation stuck in the communist revolution of Chairman Mao. No longer. Ever since Mao’s successor opened up the nation to the west in the 1970’s, it has changed drastically. The ensuing decades saw the Chinese economy expand rapidly. It’s a juggernaut. These days you can’t walk down the street without seeing a product made in China. Chinese companies are investing more and more every day in international markets.

However they’ve always been somewhat restricted by their token adherence to communist principles, this is no longer the case. China has gradually been moving in the direction of free market economic principles. These are the principles we trade by in the west. This change was solidified this November. This came with the Third Plenum. This is the meeting where a new Chinese leader will announce the social and economic reforms that will mark their reign. This Third Plenum saw the announcement of sweeping free market reforms.

The key here is to watch China with an eye to the future. They are the world’s largest growing economy. They have just announced free market reforms. This suggests that this rate of growth is only going to increase.  Chinese companies are already coming to dominate industries. Chinese events are already affecting share prices across the board. It is likely that this role will only grow as the years pass. You have to know what happens in China. Your stock prices just may depend on it.