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Tickers in this Article: YUM, KO, RIO, BHP, EDU, CEO
Most nations would salivate at the prospect of posting high single-digit quarterly GDP growth, but China is not your ordinary country. That's just what happened Monday when China's National Bureau of Statistics announced 9% economic growth for its third quarter of 2008, with certain economists and investors marveling at how this compares with the negligible economic growth rates that the United States and European Union are posting these days.

Yet others saw this growth rate as an alarming trend for China, and the world economy overall. I feel these concerns are likely overblown. (This emerging market is making strides in regulation and disclosure, read more in Investing In China.)

The Worrying Statistics
Nine percent growth is certainly nothing to sneeze at. The IMF has predicted 9.7% growth for 2008 for China and the Economist Intelligence Unit is predicting 9.8% growth. This marks a fall to single-digit growth as China had consistently posted double-digit economic expansion for more than five years. Current projections show a continued deceleration as annual expansion is expected to trend below 9% in 2009 and for each of the next four years.

That's an unwelcome trend for firms such as Yum! Brands (NYSE:YUM) and Coca Cola (NYSE:KO) that have pegged China as a major growth avenue. It is even more worrisome for metals and mining firms such as Rio Tinto (NYSE:RIO) and BHP Billiton (NYSE:BHP) as China has been considered one of the primary engines driving global economic growth. Import and export trends alike are looking weak as illustrated by a cooling of the Chinese real estate market which lessened demand for steel and worries that a European recession will cool domestic production as Europe happens to be China's largest export market.

Short-Term Hiccup
Despite the troublesome negative direction in GDP trends, China's economic expansion is unlikely to grind to a screeching halt. For starters, consumer debt is nowhere near the levels seen in the U.S. and savings rates are quite high by most global standards. The government also has a number of levers to pull; it has already announced some general plans, including eliminating certain fees on property transactions and export tax rebates. The government has a strong fiscal position to encourage public infrastructure construction and offset waning private growth. It could also keep the renminbi currency from appreciating any further, which would definitely help keep export demand afloat. (For added insight into macro-trends, check out What is GDP and why is it so important?)

The end of commodity inflation should also help, and concerns that the economy was overheating are quickly becoming a welcome worry of the past. Add it all up and China still looks like one of the more appealing regions to invest in, especially considering the stock market is down more than 60% year to date and former high fliers such as New Oriental Education & Technology (NYSE:EDU) and CNOOC (NYSE:CEO) can be had for much more reasonable multiples and have significant potential given their compelling prospects over the long haul.

The Bottom Line
Despite the near-term hiccups, there is still a stunning long-term economic upside as living standards will only improve for China's 1.3 billion citizens. An estimated 200 million have already migrated from the country to urban areas, leaving the majority yet to experience the material benefits that economic growth can bring.

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