News letter I receive from Robert Hsu Editor, China Strategy

The banking crisis is about to get a whole lot uglier, and there’s no stopping it—all thanks to China’s decision to end further investment in the U.S.

The banking crisis, the liquidity squeeze, and the collapse in home prices has sent investors fleeing U.S. stocks as if by being chased by the running of the bulls in Spain.

The result has crushed the U.S. financial system, triggered a $700 billion bailout, and led to the demise of many hallowed financial institutions—blindsiding U.S. investors who have been told that “everything would be OK.”

And that’s not even the half of it.

The financial crisis has now spilled over to Europe, Russia, Latin America and Asian markets. Which is why European and U.S. central bankers coordinated a global rate cut of epic proportions.

However, now with China’s sovereign wealth fund cutting off further investment in the U.S., it’s no wonder why foreign investors have been avoiding ALL U.S. investments at all costs and are piling into China stocks hand over fist.

The reason is simple:

China is the only country that’s not only growing but also is now only interested in saving itself AND it has the financial muscle to do it.

You needn’t take my world.

That’s exactly what Lou Jiwei, the chairman and chief executive of the China Investment Corporation, said today at the Clinton Global Initiative conference.

“China can only save herself.”

This is why the $200 billion China had earmarked for overseas investments will now be plowed back into China Banks… and why the nation also plans to spend another $586 billion on new highways and railroads.

That’s why their pulling back from the world market and investing domestically.

As Obama economic advisor, Laura Tyson, put it, “It’s going to accelerate the move of economic power to Asia.”

Do you realize what this means?

The inevitable shockwave will drive more investors out U.S. stocks and in into China where they will profit not only from internal economic growth but also from currency appreciation and domestic spending as well.

And the result will enrich those investors who understand that capital ALWAYS flows to the highest return in good times and bad…

…and are taking this opportunity to scoop up world-class assets at 20%, 30%, even 50% off their past highs in advance of the pending recovery.

What The Government Isn’t Telling You
Could Send You To The Poorhouse…

…Or Make You Wall Street’s Next Millionaire

I’m Robert Hsu, and as you’ve suspected, you’re not getting the full story on the continuing credit crisis from the U.S. government or the Fed.

The shocking truth is that Bernake’s monetary policy and the Fed’s bailout plan has flattened economic growth like a mud hut in the middle of a hurricane.

The long term-results are so disastrous for U.S. markets, that China now has pulled the plug on further U.S. investments. “thanks, but no thanks” to U.S. stocks.

China’s brain trust knows the U.S. stock market won’t rebound for some time. They know that layoffs in the U.S. manufacturing jobs will result in new hires in their country. They also know that as U.S. growth slows, China growth will drop too—but to nowhere near U.S. levels.

Our research shows their pull back to grow internally is an extremely shrewd move. After all, China’s growth will hit a mind-boggling 8% in 2009.

To be sure, that’s less than the sizzling hot years of 11% annual growth, but compared with the U.S. growth of 2%—you don’t have to be a computer scientist to know where the big money will be made in the next two years.

What’s more, China strategists also know something that Paulson, Bernanke or Bush would never admit: that unlike the U.S. banking system, the Chinese banking system is much safer—with none of the exposure to the subprime mess.

In fact, most U.S. investors don’t know this, but the Chinese banking system is dominated by four big state-owned banks—banks that can write a check anytime they want—and without Congressional approval or bickering!

And with $1.4 trillion in cash sitting in their banks, there’s no liquid crisis in China. The Chinese government can write a check anytime they want—and it will clear!
And that’s exactly what they’re going to do—invest China and not the US.

Why would they?

They already lost $2.46 billion, or 82 percent of their investment in The Blackstone Group.

Which is why the smart money is flooding into China at light speed, with investors cherry-picking world-class Chinese companies for pennies on the dollar.

And if Warren Buffett’s $230 million investment in China’s leading battery company is any indication of the opportunity at hand, this is a situation you can’t ignore.

Which is why…

You Must Reposition
Your Assets Now

Let me sum up the dangers and the opportunities:

The Bernanke/Paulson/Bush proposed bailout plan is sending U.S. stocks into the tank. The giant sucking sound you hear are foreign investors who are fleeing U.S. markets in search of safer and higher returns.

The result has slowed U.S. and global growth, forced energy prices to fall to eight-month lows, and triggered a global rate cut of epic proportions.

The chain reaction will make the US stock market even less attractive to U.S. investors…as the combination of low energy costs, low interest rates, and a stable banking system drives more investment into China.

Your Timing Is Perfect

As U.S. investors continue to hide in panic, shrewd investors like you and me are going to make a bundle as investment in China surges and the country uses its newfound capital to build more roads, bridges and infrastructure at record pace.

You needn’t take my word, a recent report by McKinsey Global Institute will tell you the same thing:

“In 20 years, China’s cities will have added 350 million people—more than the entire population of the United States today.”

“By 2025, China will have 221 cities with more than one million inhabitants—compared with 35 in Europe today—and 24 cities with more than five million people.”

“By 2030, 1 billion people will live in China’s cities…170 mass-transit systems could be built…40 billion of square meters of floor space will be built in five million buildings—50,000 of which could be skyscrapers.”

In other words, as China transforms itself from a nation of farmers to a nation of urban dwellers, the equivalent of 10 New York cities will need to be built, and in doing so will richly reward U.S. investors who invest now.

Truth is, China will continue to grow…

• Despite the collapse in the U.S.
• Despite the failure of the U.S. banking system
• Despite the demise in the U.S. housing market

The reason is simple:

With 8% growth, China’s economy is still growing like a weed. Its standard of living is on the rise. And its people are spending like there’s no tomorrow: buying into a much richer lifestyle, filled with cell phones, big-screen TVs, and cars—the same things we Americans take for granted.

When you consider that by the year 2025 China will have 221 cities with more than one million people living in them, you can only imagine the kind of money that is going to be made, as China’s newfound consumer class enters the marketplace and replaces the American consumer as the supreme driver of world growth.

All thanks to infusion of cash from foreign investors that’s going on behind the scenes now.

Tragically, the financial media is missing this investment story by a country mile. That’s because they’re blinded by the daily ups and downs in the Dow and simply can’t see beyond U.S. borders.

And since by all accounts “China’s growth is dead,” Wall Street’s analysts are not only missing this story…

…but also U.S. investors are missing out on huge profits that are headed this way.

And I’d like to help you grab your share.

For more than a decade, I’ve been helping my readers and clients grow steadily richer investing in Asia.

And I can tell you with unmatched certainty that if you invest alongside us now—while Wall Street is looking the other way—you’ll be in a superb position to pyramid your wealth as the coming capital infusion triggers a second wave of growth to hit China.

In fact, since I’ve been telling my readers about China’s next phase, our individual stocks have banked up to 108% profits…while our total holdings have beaten the S&P 500 by more than $4-to-$1 in 2007.

But even these great gains will pale in comparison to what lies ahead as China continues to build more factories, more roads, more bridges and more skyscrapers.

When you consider the U.S. economy is projected to contract next year while China is on track to grow at 8%, you don’t have to be an Einstein to know that the surge in China stocks will form the foundation for a turnaround in the U.S. stock market as many leading China stocks are traded right here on the NYSE and NASDAQ.

The bottom line is this:

In a world that’s been crippled by the U.S. financial crisis, the Fed bailout and collapsing consumer and investors confidence, the flood of capital pouring into China will not only put powerful upward pressure under the stock prices of companies that are fueling China’s new growth…

…but also change the face of Wall Street forever.

Which is why I’m telling my readers to expect…

20%—40% Profits
In The Next 12 Months

Here’s where the biggest profits will be made:

• Profit From China’s Thirst for Oil:
  
  Our top oil stock here has handed my investors 47% since I recommended it. Our newest recommendation could be even bigger. Two reasons: 1. Rising oil prices, and 2. China’s dependence on foreign oil to fuel its growth.
  
  When you consider that China’s dependence on energy exports is expected to increase significantly over the next 20 years and it is projected that China will need to import at least 60% of its oil and 30% of its natural gas by 2020…
  
  …you can see why I’m confident our oil strategy ALONE will make you 20%-40% richer in the next 12 months alone. Details here.

• Profit From China’s New Housing Boom:
  
  As Chinese workers invest their newfound wealth, their first goal is to own their own home.
  
  Our top company in this sector is China’s leading real estate services company, whose earnings have not only risen an incredible 84% in the last quarter, but whose revenue has jumped 79%.
  
  In tonight’s issue (posted online), you’ll read how the company’s transactions grew fivefold in the past year and why we see the company repeating its two-month gains of 70% that it enjoyed in 2007.
  
  
• Profit From China’s Love for Cell Phones and All Things Wireless:
  
  Make no mistake about it, China leads the world in telecom growth. By 2010, half of the world’s 1 billion global subscribers will be located in China.
  
  This is what makes our top China telecom a great play for American investors. It’s not only a state-run oligopoly but also has handed us 101% gains since we bought it.
  
  Our most recent update, now posted online, brings you the full story on all of our current holdings and why we’re banking on another 50% profits in 2009.
  
  As you’ll see…

The Biggest Move Will Come
In The Next 15 Days

As you know, nobody rings a bell to tell you when the big buying wave will begin, but I can tell you this:

Our time-proven, momentum-based stock-picking system continues to deliver profits for our readers, not only beating the market by more than $8-to-$1 since 2005…

…but also thrashing the market by $7-to-$1 last year, specifically with 35% returns vs. 5% for the Dow.

Our biggest winners to date include:

• Aluminum Corp of China, +285%
• New Oriental Education, +108%
• Morgan Stanley China Fund, +24%
• Sinopec, +58%
• SPDR Gold, +45%
• Apple, +118%
• Las Vegas Sands, +52%
• Suntech Power, +18%

Now with China’s second wave set to deliver even greater growth, even these great gains could look like a drop in the bucket.

Frankly, no other investment newsletter advisory in the world knows the China market like we do, spends as much money on research as we do or makes as much money in China as we do.

Which is why I can tell you with unmatched certainty that our research shows there’s a buying wave forming within the next 15 days.

That is also why you can invest in our recommendations with confidence that you’ll grow 20%-40% richer in the next 12 months.