If you ever heard of Ray Dalio, Chief Investment Officer of Bridgewater Associates, you may know he has You Tube videos on the cycles of the economy. All economies go through cycles and all companies go through cycles. Most of only really know when the bottom and top was, Mr. Dalio’s company has been very good at understanding when they are actually happening. If the market is at the bottom, buying is a very good thing; if the market is at the top, selling is very good thing. Mr. Dalio’s company has an excellent track record of outperforming the markets.

In an article by Keith Bradsher of the New York Times News Service, China has been going through a cycle and is near or is at the bottom, what should Premier Xi do? Introduce a new program with a fresh slogan – new, quality productive forces.

The idea is to spur innovation and growth through massive investments in manufacturing and research and development.

China has a forum called the China Development Forum which was started in 2000. The Forum explains the plan released by the Premier to corporate leaders. The corporate leaders have a question and answer series with Deputy Ministers and sometimes the Premier.

The Premier encouraged the Chinese people to replace old cars and household appliances, but there was no word if the government was offering incentives to consumers.

Thanks to the downfall in housing prices, consumer spending has fallen. One of many problems in China is real estate represents 60 to 80% of the average household assets. Real estate prices have fallen over 20% and people are struggling to meet mortgage payments as well as consumer spending is down. If we go back to Mr. Dalio’s economic cycles, countries move from industrial to service countries, and when a country goes into a service economy, the value of real estate is related to consumer spending. China has a glut of real estate and declining prices. China’s manufacturing more that double the share in the US of the economy.

Partners outside of China had questions about how China’s financial industry will keep the property industry going in the midst of local government cutbacks. But for now, the emphasis in China is on strengthening the supply and quality of goods and not on worrying about demand.

Linking to dividend paying stocks, similar to countries companies go through cycles and it is easier to make cuts to spending to maintain margins. Most of us love the company to grow, but management needs to make cuts if needed to ensure when the cycle allows for growth, to maintain profits to pay dividends. Often when there is a downturn, there is a new slogan for the future, is that happening at your company?

There are more questions than answers, till the next time – to raising questions.