Vol. 83 - GROWTH AND CYCLES

Dear member, 

Over the past few weeks the world has had its eyes on Beijing, China and the 2008 Olympic Games. The amazing multiple gold medals and world record achievements of Usain Bolt and Michael Phelps captured the world's attention as individuals and nations stopped for a moment to witness history.
 
China was in the spotlight for a different reason than its global demand for commodities. For the first time in a long time, their undying thirst for natural resources and unwavering economic growth was seen. The architectural feats and obvious development were only overshadowed by the horrendous pollution- which only further highlights the industrialization this country has undergone. China has bolstered GDP rates of over 12% in very recent quarters. There is no way this type of growth can continue. Will it be a soft decline to a tolerable rate of growth or a shocking drop?
 

In this week's 83rd Weekly Volume we will evaluate China's ability and chance to continue being a catalyst for economic growth in the world.
 

Countries grow in cyclical patterns- just as the stock market and the real estate market do. China is on the cusp of experiencing its first significant decline in years. The Premier of China Wen Jiabao and the current ruling communist party are worried about the health of China's coastal export industries. This group of high ranking officials has recently completed a tour to the coastal regions of China where these export industries exist. The Politburo met following this trip and has decided to now shift their focus to promote economic growth. It appears China has finally peaked.
 

China has experienced extensive growth in the 20th and 21st centuries. They have had thirty years of positive growth and expansion. Their GDP hit an unbelievable 12.6% in the second quarter of 2007. In the first quarter of 2008, it eased to 10.1%. Two percentage points is a huge drop, especially when you are the world's economic catalyst. Last year China was a 30% contributor to the world's growth. North American and European economies cannot compare to these figures.  The United States has dropped into negative growth, whereas Canada is right on the edge.
 

The good news for both our economies in North America is that steady growth is predicted in China. Between 8% and 10% is being predicted by lead economists for the next few years. If China's GDP fell multiple percentage points to 5% or 6% our economies and industries would take a massive hit. This is what we are concerned about at Pinnacle Digest and why we are taking China's 2% drop in GDP very seriously. It is no secret that the demand from China for oil and metals has substantially increased our economies' growth.
 

There is a cycle emerging in China that, as an investor, you need to be aware of. If China's economy