Why China

Harnessing the potential of China's evolving economy.
Harnessing the potential of China's evolving economy.

Long-term growth prospects

After a period of astonishing growth and transformation. China is on the cusp of becoming the world's largest economy and is progressing towards developed-nation status.

The country already possesses the second-largest equity and bond markets. We believe its long-term growth prospects will be driven by:

  • The re-balancing of its economy and the rising wealth of Chinese consumers
  • World leading tech innovation and a digitally connected society
  • The revitalisation of China's rural economy

 

 

Tapping into domestic growth


China’s economy is rapidly shifting from investment-heavy export industries to more sustainable, consumer-oriented sectors. Fuelling economic expansion, the spending power of Chinese consumers is rising.

China’s middle class is expanding, and with it its disposable income. By 2030, the middle class is expected to represent 75% of China’s population and have equivalent spending power to the US middle class.

Spending power: per capita annual disposable income (% of population)

Spending power: per capita annual disposable income (% of population)

Source: The Economist Intelligence Unit December 2018

 

 

Exposure to an emerging technology superpower

China is one of the world’s most digitally savvy societies. Its 750 million connected citizens spend an average of 27 hours online each week, and the digital economy now contributes a third of China’s GDP1.

  • Number 1: Robot market by annual sales2
  • Number 1: Installed wind generation capacity3
  • Number 1: Installed photo-voltaic capacity4
  • Number 1: By number of registrations of pure battery electric vehicles5
Invest in China and you gain exposure to an emerging technology superpower. Underweight China, as broad benchmarks effectively do, and you are positioned against some of the sectors expected to propel global growth in the years ahead.

 

Source: 1GTGN - Jul 2018, 2Annual Report - Sept 2019, 3Global Energy Council - Feb 2019, 4World Economic Forum - June 2019, 5IEA,- June 2020 

 

 

Rural China set for turbocharge


China’s rural economy is vast, understudied and underestimated. Yet over the last two years, rural China has quietly become central to President Xi Jinping’s reform plans, as he believes China’s ability to fulfil its major economic goals all critically depend on turbocharging the rural economy.

The development of rural China is a story of integrating an economy on a vast scale. It will be achieved by rural reform, meritocracy in government and e-commerce:

3 pillars of rural reform
  • Boosting rural income
  • Improving food security
  • Achieving environmental sustainability
Political meritocracy
  • Meritocratic system helping to drive rural growth
  • Rural revitalisation now a key metric for individual promotion
  • Move away from purely growth metrics; refocus on quality
E-commerce
  • A key growth driver supported by policy momentum
  • Significant smartphone penetration
  • Transport network improvement

 

The value of investments, and any income generated from them, can fall as well as rise.

Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.

Explore our China hub