In the midst of oil’s climb above $100/bbl, news about the flailing real estate market, and speculation in gold prompted by economic concerns, it seems as if there has been almost no room in the news for anything else. However, such conditions often present the best opportunities to find hidden gems working in industries that aren’t capturing headlines. For instance, bromine, crude salt and other chemical products are in great demand in many industries in China, and are essential for the oil and papermaking industries that are growing at a tremendous pace. China is already the world's largest consumer of paper and paperboard products, and annual consumption is growing substantially. In addition, as the world’s most populous country continues its march toward economic expansion and industrialization, the country remains one of the most sought-after investment climates.

Gulf Resources, Inc. (OTCBB: GFRE) is a leading provider of bromine, crude salt and a portfolio of various specialty chemicals throughout China, products that are necessary components for China's flourishing oil and paper-making industries. Gulf Resources is one of only six companies with a highly coveted Chinese license for bromine exploration, production and distribution, and the Company plans to capitalize on the growing demand for bromine with its large proven reserves in Shouguang, China. The Company has an annual production capacity estimated at 26,700 tons and possesses rights on over 18,775 acres of property with proven and probable reserves of over 1.7 million tons of bromine. In addition to bromine, Gulf Resources manufactures and supplies crude salt and develops numerous specialty chemicals for China’s papermaking and oil & gas industries. In 2006, Gulf Resources delivered 10,000 tons of oil & gas related chemical products, along with 7,000 tons of papermaking related chemical products. Gulf Resources is aggressively pursuing complementary acquisitions, which coupled with sustained organic growth, will help us become a dominant worldwide player in the bromine and specialty chemical industries.

In the United States, the world's largest consumer, consumption of paper and paperboard products has risen at an average annual rate of 1.85% over the last 20 years. By contrast, consumption in China has risen at an average annual rate of 10.38% for the last two decades. There remains tremendous room for further growth, with per capita consumption in China still only 52.7% of the worldwide average, and a miniscule 8.6% of the U.S. average. According to the RISI statistics, the consumption of kraft paper in China increased from about 13.0 million tons in 2002 to about 18.2 million tons in 2004 with a compound annual growth rate of 18.3%; the estimated consumption in 2009 is about 28.2 million tons. From 2004 to 2009, the estimated compound annual growth rate will be around 9.2%. China is the fourth largest bromine producer worldwide, with bromine sales worldwide at $1.24 billion, $290 million of which originates from China. Gulf Resources has an annual production capacity estimated at 26,700 tons and possesses rights on over 18,775 acres of property with proven and probable reserves of over 1.7 million tons of bromine. Gulf Resources is the largest producer of bromine in China with a domestic market share greater than 15%. Through targeted complementary acquisitions and further organic growth, the company’s goal is to continue increasing its bromine production each year, while growing its proven reserves. The rising international demand for bromine, coupled with the fact that China will soon become the largest papermaking country in the world, is anticipated to have a significant impact on the bromine demand. Based on research from Freedonia, the market size of oil chemicals will be $8.1 billion in 2007 growing to $9.2 billion in 2010.

The spectacular unremitting growth of China has dominated global economic news for years, and shows little signs of abating. Over the last twenty-five years, China's economy has grown at a remarkable 9% average annual rate. Despite the fact that naysayers continue to forecast economic slowdown, figures show that China's economy grew by 11.9% in the second quarter of 2007 compared with the same period a year ago. In addition, the country's growth has been close to, or above, double-digits since 2004 and the figures for the period from April to June show a sharp increase over the 11.1% growth reported for the first quarter (Source: EuroNews). With this incredible sustained growth, Chinese government officials have gathered to address issues related to growth, and the outlook remains extremely positive, as a government think tank issued a report forecasting economic growth in 2008 at 10.8%, just slightly below the 11.5% growth expected for 2007 (Source: Associated Press, 12-03-2007). Operating within this exceptionally favorable economic climate provides Gulf Resources a significant advantage, and offers investors an excellent opportunity to invest in the dynamic Chinese economic growth.