Chinese stocks surge 5.1%

The contrast couldn’t be more striking: Yesterday, the S&P 500 declined one-third of a percentage point ...

But overnight, China’s Shanghai stock exchange was up as much as 5.1%.

Why? Because while the U.S. economy continues to struggle through our worst recession since the Great Depression, the Chinese economy is exploding before our very eyes!

Almost nobody was prepared for this. As Europe and the U.S. fell into recession and our economies began to contract last year, demand for Chinese exports cratered. Many feared that the West’s economic malaise would cause Beijing’s economy to shrink as well.

It never happened. China’s economy continued to expand even as ours withered — and for a fascinating reason: China doesn’t have to depend on exports to grow its economy anymore — Chinese consumers are taking over as a major driver of economic growth there!

Hundreds of millions of new middle class and wealthy consumers are transforming China into a world-class IMPORTER of goods and services — both from Asia and all over the world!

In the first half of this year, China surpassed the U.S. as Japan’s #1 trading partner. In the second three months of this year, France’s exports to China and other East Asian economies soared 18.7% — and overall, exports from eurozone countries jumped 6.3%.

No wonder Citigroup recently boosted its estimate for annual Chinese economic growth to 8.7% for 2009 — and forecasts that China’s economy will expand at a blistering 9.8% next year!

The China Miracle is spreading throughout Asia

China’s transformation from a one-horse exporting nation into a major global importer and consumer of goods and services has also lit the fuse on economic growth throughout the region.

Early this morning, for instance, we learned that South Korea’s economy grew much faster than previously reported in the second three months of 2009 — the fastest since the fourth quarter of 2003!

There’s more:

• South Korean exports jumped 14.7% in April, May and June from the previous three months ...
  
  
• Construction investment grew more than four times faster than was previously reported ...
  
  
• In July, sales at major South Korean department stores rose for the fifth month in a row ...
  
  
• The nation’s manufacturers increased production for a seventh consecutive month in July ...
  
  
• Consumer confidence climbed to the highest level in almost seven years in August, and ...
  
  
• South Korea’s benchmark Kospi stock index was up overnight and has now gained a whopping 43% this year, beating our own S&P 500 more than three times over!