It’s been a busy week of non-market developments.
A rogue missile strike on Poland raised tensions yesterday.
Meanwhile, at the G20 summit, both US and Australian leaders tried to mend relations with their Chinese counterparts.
And then, of course, there is the big crypto debacle going on, thanks to the collapse of FTX.
All in all, a very chaotic series of events.
But I don’t want to talk about any of them today.
Instead, what I think investors should be giving far more attention to is the big milestone achieved on Tuesday. If you missed it, our world now has more than eight billion people living in it!
I find that incredibly daunting to think about. Just trying to imagine how diverse and how varied our planet has become…
Of course, a lot of this population boom is thanks to China. I don’t need to tell you how instrumental demographics have been to the Chinese economy’s rapid rise. Not only in terms of output but also consumption.
But here’s the real kicker.
As soon as next year, China will likely no longer be the most populous country.
Instead, they will have to settle for second place as another emerging economy races to overtake them…
I am, of course, talking about India.
The rise of a new empire
See, while China is finally starting to face the challenges of a looming shrinkage in population and economic output, India is only just getting started.
In fact, I think the mending of fences we’re seeing between China and the West this week is fairly symptomatic of this changeover. For the first time in a long time, China may be realising it can’t be a growth powerhouse forever.
This is particularly important given the decoupling we’ve seen in manufacturing over the past few years. Ever since Donald Trump’s trade war, the Western reliance on cheap Chinese production has steadily been forced to diversify.
As a result, India has quietly become one of the big winners.
Just take the iPhone, for example, a product that has been a huge part of the rise of Chinese manufacturing. For years, the newest iPhones were all built and shipped out of China.
But, as of September this year, that has changed.
Foxconn — the primary assembler of iPhones for Apple — has been ramping up its efforts in Indian plants. In fact, just this week, it announced its biggest plant in the country to date, which will employ 60,000 workers.
This is the beginning of a plan that will culminate in a quarter of all iPhones being made in India by 2025. That’s on top of Apple moving a fifth of its production of other goods to Vietnam by the same date.
Suffice it to say Apple and Foxconn are making big moves to diversify away from China…
That’s why, in my view, investors should be paying a lot of attention to India. Especially for Aussie investors like yourself.
Because while you shouldn’t expect quite the same boom we enjoyed from the rise of China in the ‘00s, we are likely to see select industries and companies thrive from Indian growth in the coming years.
Critical minerals and the demand to come
Over the course of the next decade, a fifth of global growth is set to stem from India.
To make that happen, the country is going to need a lot of infrastructure. After all, as Prime Minister Narendra Modi’s ambitions have made clear, he wants India to increase its manufacturing potential.
By 2025, he had hoped to turn the sector into a key part of the economy that could generate a quarter of the nation’s GDP. As of right now, manufacturing is still a far cry from that goal, accounting for just over 14% of GDP.
But it is changing…
As an article from The National explains:
‘While progress for several years was slow, experts say that the country’s manufacturing industry is gathering momentum. India’s goods exports hit a record high of more than $400 billion in the financial year to the end of March, official data shows.
‘“I truly believe that foreign companies are increasingly turning to India to build their manufacturing units,” says Mukul Goyal, co-founder of Stratefix Consulting. “Post the pandemic, companies have realised that depending on a single location for manufacturing is not beneficial for them. India, therefore, comes as a relief to those looking for an additional location.”’
In other words, now more than ever, India is capitalising on China’s drawbacks. Just like we can see from the iPhone example.
And while the country is certainly placing emphasis on locally made goods, it will still require plenty of commodities. That is where Australia and our vast resource riches come into the fold.
Just like we saw with China, you can’t make all these goods if you don’t have the raw materials to do so. That’s where new and old mineral producers can fill the gap, creating lucrative conditions for our local mining stocks.
That’s why our new resources expert and former geologist, James Cooper, is adamant that now is the time to be looking at the mining sector. Not only because we’re seeing a lot of the big names making big moves but also because the next generation of up-and-coming miners is finally making names for themselves.
Don’t take my word for it, though. You should really be listening to James himself. You can listen to just some of the ways he is telling his subscribers to plan for this mining boom yourself by clicking here.
Because at the end of the day, whether it’s China, India, or something else…Australian commodities are poised to continue their strong run. And in these volatile market conditions, you can’t afford to ignore that kind of opportunity.
Regards,
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Ryan Clarkson-Ledward,
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.
