Is the Age of America Ending in 2016?

It seems inconceivable in Washington or New York, but across the globe, financial experts believe that China will supplant America as the dominant economy by 2016. According to an International Monetary Fund report, China's economy is expected to grow from $11.2 trillion to $19 trillion, while America's economy will only rise from $15.2 trillion to $18.8 trillion. The idea that China will eventually take over as the dominant economy is not news to most economists. Given their demographics, including an expected population of approximately 1.5 billion people by 2025, and their exponential growth rate, economists have long predicted the rise of China. What is surprising is the swiftness with which America's and China's fortunes are trading places. The rapidity that China has climbed the ladder is fueled in large part from the differences in purchasing power in the two nations. The yuan is kept artificially low by the Chinese government, allowing it to run a trade surplus, as its industries export goods cheaply across the globe. Much of China is also in poverty or near-poverty, so it takes less income to purchase the same amount of goods there as it does in America. Traders do not have the luxury of stopping world-wide trends, so the odds that any one person can halt the decline of America and the rise of China is probably a bit of tilting at windmills. Investors can, however, find smart plays on either side of the equation. Take, for example, the yuan itself. If China is going to keep it artificially pegged, that provides a bit of stability and removes some of the guesswork around your forex trades. Take a look at the WisdomTree Dreyfus Chinese Yuan Fund CYB. The fund seeks to earn current income reflective of money market rates in China available to foreign investors, and to provide exposure to movements in the Chinese Yuan relative to the United States dollar. Year to date, CYB is up 0.83%, with much of that growth coming during April. That's not too surprising, given the downturn the dollar had at the hands of other currencies last month. Another play to look at is directly investing in the Chinese economy. Morgan Stanley offers an ETF that lets you get in on the action. The Morgan Stanley China A Share Fund CAF invests at least 80% of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges.