HOW TO BUY CHINA

Compelling, too, are food products. Taiwan, South Korea and Hong Kong consume eight to 10 times more meat, sugar, coffee, dairy products, wine, beer and fish per capita than China. As living standards rise, China's demand for richer foods will rise at a time when its own production is falling, putting enormous pressure on prices. Therefore, investors should buy tracts of farmland or a basket of agricultural-commodity futures consisting of wheat, corn, sugar, coffee and orange juice.

Beware industrial commodities other than oil. Prices for iron ore, steel, pulp and paper, nickel, aluminum, fertilizer and copper have already seen gains, sometimes huge, driven by speculators making the China play. Moreover, China's economy is overheating and is likely to experience a severe slowdown in the near future, depressing prices temporarily.

Still, commodities are attractive in the long run. China's Achilles' heel is lack of water, food, oil and other industrial commodities. Oil is a particular weak point, because at present the United States could block practically all supplies to China from the Middle East with one airport carrier placed in the Strait of Malacca. Therefore, China is likely to become more geopolitically active in order to secure all its resources, leading to the possibility of conflict.

FABER IS A HONG KONG-BASED INVESTMENT ADVISER AND PUBLISHER OF THE MONTHLY GLOOM BOOM AND DOOM REPORT.

© 2004