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Is China Facing a Collapse or Is It Going to Be the World’s Superpower?

Did you know that close to 17% of the companies listed on the Singapore Exchange are based in China? Therefore, it is an in investor’s interest to keep an eye out on the prospect and the risks that the Middle Kingdom faces. The news seems to be reporting a frightening and pessimistic outlook on China. The question many are asking is, are we or are we not seeing the possible collapse of China? If we are not, will China be the world’s economic powerhouse?

There are many schools of thought, but this is my view.

China will be an economic powerhouse in the future. Even if it might fall short of being a global superpower, its influence in Asia should continue to grow. However, the journey to becoming a superpower will not be smooth.

As famous billionaire investor, Jim Rogers, pointed out, one can see the future of China by looking at the rise of the United States during the 19th Century. When the US was gaining prominence in the world, it was facing a civil war, very bad human rights records, a weak government, and a feeble rule of law. Yet, the country ended up being the global superpower we know today.

In essence, what China is going through is more or less a repeat of history. It continues to face unrest within different ethnic groups, there is questionable human rights records, questionable corporate governance, corruptions and currently a debt crisis in the property market and local government level.

However, the simple fact remains, China has opened its door to trade with the world. With more than a billion current and future hardworking population eager for a better quality of life and a higher social status, the potential of China is far from over. Once a population has tasted economic success, it is hard for them to go back to the lives before.

Foolish Take

Predicting the short term future of a company and a country is hard. It is not possible to know if China will face a possible collapse of its debt crisis in the next 5 years. If no extreme events occur in the next 50 years, China’s future still looks bright. The more important question to answer here is, what opportunities do that mean to you as an investor?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any companies mentioned.