"Hope all is well.

"I am just back from a 3 week tour of the Far East to meet Asia focused Fund managers. I must say I was surprised at how bullish and up beat the world is over there. Got quite a bit of stick from the local Asian managers about the way we are handling our credit crises. Basically, when they had their crisis in 1997 the West advised them to bite the bitter pill and restructure all the bad debt - i.e. the opposite of what we are now doing here. Humbug!

"I was very interested to hear that the Chinese authorities are changing tack. Apparently, and to paraphrase, the Chinese authorities have been paranoid that they could potentially face civil unrest if they allowed their GDP to fall. However, in 2008 when China began to feel the effects of the crises they pumped hard to stimulate their economy. We all know about that. However, there were factory closures, people did lose their jobs, and it was this that triggered the massive stimulus. The benefits of the stimulus were not immediate and for a period, laid off city workers returned to their rural homes and to the surprise of the authorities, there was no unrest. So now the authorities feel that they do not need their economy to grow at 10%pa; 4% - 5% will probably do. This will also free up the government to now focus on the rural parts, rebuilding villages, schools, improving efficiencies in the agricultural sector. Also, the government can now focus on important 'future proofing' infrastructure projects such as sanitation and pollution control, water and clean/alternative energy. The 'wealthy' city dwellers can now look after themselves having enjoyed many years of prosperity, saving are high and the city dwellers are now becoming consumers. The one child policy has been relaxed a bit but the many 'single' children have the benefit of 2 parents and 4 grandparents happy to give the 'single' child a helping hand in life with all those accumulated savings, like buying them a flat, which will then need to be furnished with beds, sofas and TV's. So whilst I have read many bearish reports on China, it may be that some of the exporting investment themes are long in the tooth but it now seems to me that a whole new set of themes are about to come into play. Wondered what you thoughts are on this."

Eoin Treacy's view Thank you for these helpful insights. Your experiences are very much in tune with the change in government policy we have highlighted and advocated for a number of months. As I'm sure you witnessed, China has enough infrastructure so that the additional growth value of each Yuan spent is no longer competitive with what can be gained from investment in healthcare and social security. This realisation is transforming the focus of government policy towards fostering the consumer economy.

In future, China will remain one of the world's major manufacturing hubs but there is significant growth potential for both foreign and domestic consumer related companies as China's excess savings begin to be spent. (Also see Comment of the Day on Friday).