- Paul Krugman is worried about China: time to buy
- Why I'm devoting myself full-time to biotech
- Would you like to live in central London? Well, you can't
- Yesterday's close: FTSE 100 down 0.5% to 6,587… Gold up 0.88% to $1,333.90/oz… £/$ - 1.5390
From John Stepek, across the river from the city
Dear Buzzhairs Buzzhairs, 
New York times columnist and Nobel-prize winning economist Paul Krugman is worried about China.
"China is in big trouble… The country's whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be."
I'm sure Krugman is a smart guy. And he's really only making the same points that early China bears were making – to much derision from the bullish majority - two or three years ago.
However, we've never knowingly agreed with him on anything.
So I'm ever more persuaded that however bad the outlook is for China, it's not as bad as everyone now seems to be expecting.
And that suggests there are good opportunities to profit by betting against the consensus...
The latest issue of MoneyWeek magazine is out now
 Inside this week's issue:
Digging up bargains: The best value mining stocks
As inflation rises, you want hard assets in your portfolio, or the companies that control them. That means miners, says John Stepek.
Other featured stories:
● Why Google still looks a good bet
● Matthew Lynn: Britain's youth should stop whingeing
● The hip-hop entrepreneur who's worth $75m
Stop the press! Government embraces capitalism For a glimpse of how China might not be quite as doomed as everyone thinks, check out their latest 'mini-stimulus' package. This was announced this week, and markets were quite disappointed by the move. This isn't China printing a gazillion tonnes of money as it did in 2008/09. We won't see a flood of cash driving asset prices across the world much higher. But from China's point of view, this is a far more sensible stimulus. It actually has a chance of helping the 'real' economy, rather than just making speculators happy. And if your key goal is social harmony – for want of a better word – then that's the way to go about it. The package temporarily scraps taxes for smaller companies. It also cuts through some of the red tape around exporters. As the FT points out, bypassing government like this is a smart decision. "The 2008 stimulus was largely channelled through local governments, which used the money to finance unproductive projects." By putting money in the pockets of entrepreneurs, China is encouraging the sort of growth it really needs: growth that comes from investment in projects that actually pay for themselves. This is what's known as 'supply side' reform. In short, what China is doing here is stepping away from state-directed investment, and towards more efficient allocation of capital. A step towards capitalism and away from central planning? That's quite a revolutionary step in itself, particularly when the West is turning in the opposite direction. The British government, for example, has promised to cut red tape, but in truth, small businesses in our country are being suffocated in the name of propping up house prices. Pretty contemptible really, and you know I could rant about it for hours, but let's get back to the point in hand. How to profit from a Chinese turnaround This is a tiny step for China. In the face of the country's bust banking system and its other huge problems (water shortages, social unrest, dreadful demographics, a horrendously imbalanced economy), it doesn't seem like much. But when everyone else has such a downer on China, these little glimmers of light can be all it takes to spark a bit of a turnaround. So how do you play it? Not through Chinese stocks. As we've mentioned before, Chinese politicians couldn't give a monkeys what happens to the local stock market. The Chinese people quite rightly already see it as a less entertaining version of a night out in Macau's casinos. So if the market tumbles – as it has – it's not the headline-grabbing, revolution-starting event that it might be in say, the US. (If you think that's a terrible exaggeration, ask yourself this – if the S&P 500 was currently sitting at 2009 levels, as China's main market is, do you think the incumbents would stand a chance at the next election?) This is the main reason why I'm not keen to invest in Chinese stocks. As 'stakeholders' in China's economic model, minority foreign shareholders probably rank somewhere down with the cockroaches in terms of relevance. Of course, every market has its price and China might be getting there. But not quite yet. Instead, I'd be more interested in playing this through the mining sector. I suggested a number of tips in a Money Morning last week. And in the current issue of MoneyWeek magazine, we look in more detail at the sector – if you're not already a subscriber, you can get your first three issues free here. Got a comment on this article? Leave a comment on the MoneyWeek website, here. Until tomorrow, John Stepek Editor, MoneyWeek Our recommended articles for today… Why I'm devoting myself full-time to biotech - Research into biotechnology is as exciting as it is important, says Tom Bulford. And for smart investors, it can also mean big profits. Why I'm devoting myself full-time to biotech. Would you like to live in central London? Well, you can't - Ordinary families have been priced out of the central London property market by rich foreigners, and are leaving the city in their droves. Merryn Somerset Webb asks how much longer this can go on. Would you like to live in central London? Well, you can't. And for yesterday's market update, see below...
The alarming truth about Britain
A dangerous financial experiment – carried out by our own government – has gone horribly wrong.
The effects will be felt by everyone in the country.
We believe savers and investors like you could be worst hit. And it could put everything you have worked hard to achieve at serious risk.
Read this as soon as you can.
Find out what's happening – it's all here in black and white.
MoneyWeek magazine is an unregulated product published by MoneyWeek Ltd.
Market update
Click here for the latest stock market news and charts.
The FTSE 100 slipped back further yesterday, losing another 0.5% to close at 6,587.
Engineering firm GKN was the worst performer of the day with a fall of 4.2%. At the other end of the table, pharmaceuticals company Shire topped the risers with a gain of 5.5%.
In Europe, the Paris CAC 40 fell six points to 3,956, and the German Xetra Dax was 81 points lower at 8,298.
In the US, the Dow Jones Industrial Average rose 0.1% to 15,555, the S&P 500 added 0.3% to 1,690, and the Nasdaq Composite gained 0.7% to 3,605.
Overnight in Asia, Japan's Nikkei 225 slid 3% to 14,129, and the broader Topix index lost 2.9% to 1,167. And in China, the Shanghai Composite fell 0.5% to 2,010, and the CSI 300 was 0.6% lower at 2,224.
Brent spot was trading at $107.50 early today, and in New York, crude oil was at $105.12. Spot gold was trading at $1,335 an ounce, silver was at $20.11 and platinum was at $1,442.
In the forex markets this morning, sterling was trading against the US dollar at 1.5377 and against the euro at 1.1582. The dollar was trading at 0.7532 against the euro and 98.81 against the Japanese yen.
And today, broadcaster BskyB reported a strong set of results. Revenues for the year to 30 June rose by 7% to £7.2bn, and pre-tax profits rose by 10% to £1.26bn. The company announced a £500m share buyback, and an 18% increase in its dividend.
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