| JIMMY C. CHANG, CFA Chief Investment Strategist 212.549.5218 [email protected] Yesterday Once More; China’s housing boom once again fueled global growth, but how long will it last? et us begin with a trivia question—what was the most — in human history, and the other marked the founding of argu- consequential publication in 1776? With this article ably the most powerful and wealthiest nation ever. being published around July 4, you would probably think we are hinting at the US. Declaration of Independence. That . would be a good response, but unlike the laws of physics or Do Not Bet Against the House mathematics, there is not exactly a right answer to sucha At around the time that America celebrated its Bicentennial, question. China reached a historic turning point. Chairman Mao passed One could also point to a book published on March 9, 1776, away in September 1976, and a month later, the arrest of the that has had a transformative impact over time. It has a long mance Four marked the end of the Beeaiet O08 Cultur “ title: An Inquiry into the Nature and Causes of the Wealth of neve Lean pens Maeping t oe onc von, an Nations, and is generally referred to as The Wealth of Nations. °™ ah econ re va For Le Son Fon sear y amd GDP This seminal work supposedly took Scottish economist and growth par annum or the next tour sdevaves ang lited more hil h : than 800 million people out of poverty. Today, the Chinese philosopher Adam Smith 10 years to complete, and was based +s the | -_ id based nasi on notes and observations spanning 17 years. It challenged the °COTO™Y''S the largest in the world based on purchasing power mercantilist and physiocratic economic theories that domi- parity. nated the intellectual debate during the mid-18th century. Interestingly, China's rise had little to do with Adam Smith's Mercantilist theory held that countries grow wealthier by maxi- _ free-market capitalism. While China's unprecedented economic mizing domestic production and exports, and