Chinese Infrastructure ETF

China Infrastructure ETF: A Long-Term Play on Growth Story

The Emerging Global Shares China Infrastructure (NYSEArca: CHXX) began trading this morning. Richard Kang, Emerging Global Shares’ Chief Investment Officer and Director of Research, points out that demand for infrastructure is constant. “When you flush that toilet, the water has to go somewhere.”

Demand for infrastructure is constant. It's a "sure thing" investment. It's just like land. They never make any more of it.

Chanos On China

Now 30 billion square feet of office space would mean that there is a 5 foot by 5 foot office cubicle being built for every man, woman, and child in China. You can do the math. It's a frightening statistic. This is a country that is going to have as much office space as it needs for a long, long, long time once these projects get completed. And since they are huge part of the GDP driver now, what's going to happen when you get to the end of that rope? It's not going to be pretty. Now a lot of that stuff is going to get shelved...

There's nothing that can stop an up and coming superpower once the momentum has been established though. Everyone knows it.

Cities in the Great Depression

America's larger cities in the 1920s enjoyed strong growth. With the end of large-scale immigration, populations stabilized and the plentiful jobs in the cities pulled families upwards in terms of social mobility. Investment in office buildings, stores, factories, utilities, streets, and, especially, apartments and single-family homes, added substantially to the infrastructure, supported a very even better times were ahead. After 1929, the optimism ebbed away, overwhelmed by a deepening pessimism that made long-term private investment seem inadvisable.

The Depression's damage to large cities, suburbs, towns and rural areas varied according to the economic base. Most serious in larger cities was the collapse of the construction industry with new starts falling to less than 10% of the norm of the late 1920s. Although much needed work was deferred, maintenance and repair of existing structures comprised over a third of the private sector construction budget in the 1930s. Devastating was the disappearance of 2 million high paying jobs in the construction trades, plus the loss of profits and rents that humbled many thousands of landlords and real estate investors.