It is estimated that China will spend $42 billion to host the Olympics. To put that into perspective, that is almost three times what Greece spent on the Athens Olympics and roughly the cost of Hurricane Katrina reconstruction. That infrastructure build out has certainly been a major boost to the Chinese economy, but China plans on spending even more on the 2010 World Expo in Shanghai and the Sichuan earthquake reconstruction is expect to cost $140 billion. The Chinese building boom is going to last for a lot longer.

With all the great economic strides China has made, it is sometimes easy to forget that China is still a communist country and is controlled by the Communist Party of China. Part of that Communist control is over prices. The National Development and Reform Commission (NDRC) controls the prices on thousands of items: Drugs, grain, edible oils, pork, noodles, milk, eggs, cigarettes, cloth, steel, train and bus fares, cement, fertilizer, college tuition ... and fuel. Last week, the NDRC raised the price of gasoline and diesel by 17% and 18% respectively. If rising fuel prices are bad for the U.S. economy, they must be just as bad for the Chinese economy, right? At least that is the popular advice being delivered by many of the so-called experts and financial shrills on Wall ...

After amazing growth in 2007 Chinese stock market has been among the biggest decliners in 2008. Chinese index SSE Composite is down around 50% since the beginning of the year.

Based on P/E valuation China seems to be cheap. P/E ratio has gone down from threatening 50 (a year ago) to current 20. Average earnings growth for Chinese companies remains strong and is on average 30%. Quotient of P/E and earnings makes interesting valuation (PEG ratio is 0,67).

Chinese economy isn’t so much dependent on export as others. Share of export on total GDP is only 38%. It makes relatively safe peer in case of global slowdown.

Next factor is Chinese currency which is undervalued against USD and in future we can expect more and more tension for bigger liberalization.

The point to be considered are interest rates. Endless rates hiking doesn’t pull rates for deposits which are artificially kept low. That’s why there …

Dear Subscriber,

When Martin called me for a chat the other day, I had no idea he was going to record it, put it up on the Web, and give all of our readers a chance to hear it.

But I’m glad he did — for two reasons: First, because I’m headed for Shenzhen next week on a special new mission — to visit the company that I think will benefit more from the energy crisis than any company in Asia, and perhaps in the world. And second, because, with the latest correction, these stocks are now dirt cheap.

So in case you missed the …

When Americans first celebrated Memorial Day, our nation was split in two — North and South.

Similarly, our planet today is divided in two separate worlds — East and West.

They’re not at war. But in the never-ending battle for economic wealth and hegemony, the chasm between them couldn’t be deeper: China and much of Asia, growing by leaps and bounds; the U.S., sinking into recession.

Coincidentally, one year ago, Tony Sagami and I debated this very topic.

We both are American and both love this country. …