As the pain here in the United States continues to grow, with General Motors’ (GM) viability in question and February’s retail sales sinking again, it leaves more and more investors asking the question “Is there anywhere that’s safe to invest?”. While the editorial staff still adamantly contends there are plenty of rising U.S. stocks, finding them - and being able to keep them - has admittedly been though to do lately. Dire economic news and a seemingly out-of-touch government are pouring water into a sinking boat faster than the market can bail it out.

China, however, may be a different story. Oh, their economic boat is still taking on water, but at least their market is bailing water out of the boat faster than it’s getting put back in. If economic health really is the key to the market’s health, a little more exposure to China’s stocks could be a good thing.

Just to set the tone, a little compare-and-contrast is in order….

• Last quarter, the United States’ GDP shrank at a rate of -6.2%, For the same quarter, China’s GDP ’shrank’ at an annualized growth rate of +6.8%. (It ’shrank’ because it had been growing as fast as 14% at one point in 2007.)
• China’s 2009 budget deficit will be about 3% above their GDP. The United States deficit for 2009 is on pace to exceed GDP by about 12.3%.
• China is planning a stimulus to their economy that’s a lot more potent than the United States’ stimulus. The proposed $586 billion stimulus China has been discussing is about 20% of their GDP. Every $1 trillion worth of stimulus for the United States is about 8% of GDP. Granted, the U.S. stimulus price is ever-changing (higher), and the Chinese stimulus is still in question. Even if China’s is shaved and the United States’ swells, they’re still doing more.
• Year-to-date, China’s market is down 14.3%, while the U.S. market is down about 23.7%. Neither is ‘good’, but on a relative basis it sure seems like stocks have less of a bearish tide to overcome in China.
• China’s exports fell 17% in January, which on the surface would appear to be a problem for a major exporter. However, imports sank by 40% in January. So, it seems to be more of a problem for other countries than it does China.

Just some food for thought.

As far as turning these facts into something ‘actionable’, there are plenty of Chinese ADRs available to U.S. investors. In fact, there’s a good chance you already own one of them…. China Energy Recovery (CGYV).

Almost all of the company’s business has been won in China, largely because that’s where all the demand has been mandated by the government. Though the latest round of stimulus money mentioned above isn’t necessarily targeting “green” initiatives, coupling the state’s new clean-energy requirements with lots of stimulus (expansion) spending still bodes will for China Energy Recovery. That may be why the stock has done so well over the last week, while the American market has not.

On that note, now may be a good time to wade into CGYV if you’re not already an owner, but would like to be.

The key levels we’re watching here for CGYV are still $2.00, and $2.20. If we can get above the first one, the market should be optimistic - the stock has had trouble there before. If we can get above $2.20, the market should be outright excited - it would mean new multi-week highs were being hit, and could inspire a breakout move. That’s a reason you’d want in beforehand though, not afterwards.

As it stands right now, CGYV’s bullish momentum is solid… seven days of mostly higher highs and higher lows. Volume has been decent behind the rebound, though not great yet.

The reason for the strength, however, is longer-lasting… we really do think China’s economic resiliency could make for some pretty rewarding Chinese stocks, available to you in the form of American Depository Receipts. China Energy Recovery would be a good one to start with, but we’ll see if we can find some other attractive ones while the U.S. is still cleaning up its mess. Stay tuned.

Don’t miss our recommendation of any Chinese stocks that are poised to benefit from the country’s economic resiliency. Sign up for the free newsletter today, and we’ll alert you of any official MicroCapPress.com stock trades. We find the opportunities and trends nobody else can.