Investing World Cup: China vs. Western Europe

Could you pick two more different regions of the world to compare than China and Western Europe? Almost polar opposites in terms of social structure, demographics, and economic growth, China and Western Europe are often matched up as a case-in-point example of "the world of yesterday" versus "the world of tomorrow."

But let's hold on a second. Dismissing the past may be fashionable when booms are under way, but that's not always an especially Foolish thing to do. Berkshire Hathaway's (NYSE: BRKa  ) (NYSE: BRKb  ) Warren Buffett was all but sent out to pasture by the financial press during the tech bubble, yet here he sits, still quite wealthy while much of the tech-bubble riches evaporated into thin air.

No doubt, China is growing strongly today, but it's also rushing headlong into some issues that will challenge and strain the country. Environmental degradation, the wealth gap between rural and urban communities, the heightened interest in self-expression that often accompanies newfound wealth -- all of these are problems that Western Europe has largely ironed out but that China is just beginning to face.

So while China is almost assuredly going to be an economic force for the remainder of our lives, let's see in this debate whether Western Europe may still have a few tricks left in the bag.

Economic details*
(Including largest in Western Europe in total GDP)

Country GDP/Capita GDP Growth Inflation
China $1,700 8% 2%
Germany $36,290 1.6% 1.6%
United Kindom $38,860 1.6% 1.7%
France $37,500 1.7% 1.6%
Data from Economist Intelligence Unit.
*Projections for 2006.

Notable companies:

  • China: ChinaMobile (NYSE: CHL  ) , Baidu (Nasdaq: BIDU  ) , CNOOC (NYSE: CEO  )
  • Germany: E.ON (NYSE: EON  ) , SAP (NYSE: SAP  ) , Deutsche Telekom (NYSE: DT  )
  • United Kingdom: Lloyds Group (NYSE: LYG  ) , GlaxoSmithKline (NYSE: GSK  ) , BP (NYSE: BP  )
  • France: Alcatel (NYSE: ALA  ) , FranceTelecom (NYSE: FTE  ) , Total SA (NYSE: TOT  )

In this match, Rick Munarriz will be taking a look at China, while Jim Gillies focuses on Western Europe.

GlaxoSmithKline and Total SA are Motley Fool Income Investor picks. Lloyds Group is a Motley Fool Inside Value pick. Take the newsletter that best fits your investing style for a 30-day free spin.

For more international stock ideas, check outThe Motley Fool International Report: Around the World in 80 Minutes.

Fool contributor Stephen Simpson but has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).


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