August 2019
The question of ‘what to do about China’ remains near the top of many asset allocator priority lists. The cross currents created by both fundamental structural drivers—China’s evolving economic importance and growing weight in benchmarks— and the uncertainty caused by regular bouts of geo-political tension, make this a complex issue.
In this publication, we examine the case for a dedicated China equity allocation in a global context and ask the question ‘how much China do you need?’. We also review different investment options to access the China equity universe. Overall, we believe it is very likely that allocations to China equities will rise significantly in coming years. Accordingly, a holistic, actively managed portfolio that includes ’all of China’ - covering both the onshore and offshore investment universe -is likely to become a preferred solution for investors.
In 1978, Chinese leader Deng Xiaoping launched the “Reform and Opening Up” campaign – a long term strategy to bring prosperity and well-being to the Chinese population.
Forty years later, China has achieved tremendous success in economic growth and has become the world’s second largest economy. In 2018, China represented 15.2% of world GDP, comparing to just 1.8% back in 1978.
And despite its scale, China growth is predicted to continue outpacing the rest of the world- the IMF estimates that China will represent 19% of global nominal GDP by 2024, second only to the USA.
Read the full report