Road to 2030

The rise of China

Predictions are straightforward to make but hard to get right. For Chinese​ economic growth, things have typically been a little easier, since GDP growth is an input into (rather than an output of) China’s planning regime. The success of that developmental system is why China’s economy has grown fourfold over the last 20 years, from the global number six to number two today.
The Road to 2030 project is an investment-led project designed to articulate possible visions of the future, and the key drivers behind those outcomes. We explore five key themes, one of these is the rise of China.

Managing risk—that is to say, building strategies that are resilient to events like these—is not easy. So what can investors do?

In Road to 2030, we take a practitioner's perspective aided by both internal and external experts to ask the ‘what if’ questions and consider major changes to the status quo.

Forecasting is difficult, especially about the future, but one can prepare for “the future that has already happened”.

The project is laid out in five overarching themes followed by a scenario at the end. At the very least, the Road to 2030 is a horizon-scanning and risk management exercise. At its best, it provides a foundational understanding of the main drivers that will transform markets over the next decade.

It is inevitable that as China transforms into a major global economic powerhouse, its influence on the world stage will grow and this will lead to friction with the incumbent, the US.

How do we think about the rise of China?

In general, the return of multi-polarity after over a century of unipolarity represents a growing source of opportunity and risk for investors. Looking ahead, the Chinese government has said it will not set a goal of doubling GDP from 2021 onwards in the interests of focusing on higher quality, longer term growth, and that it will also rein in credit growth. That implies an economy growing more slowly than the current target of “around 6%”.


Major structural changes are affecting the Chinese economy. Based on our collaborative research, the four most important themes for investors are:

  • The shift from an investment to consumption economic growth model
  • China’s ascent up the value chain
  • China’s outward economic projection
  • The US response

We use mindmaps to organise and articulate our thoughts about subjects that are conceptually complex, and below shows our theme the rise of China.

The rise of China mindmap

Explore Road to 2030

Road to 2030 - Demographics

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Demographics

Demographic challenges by their nature take time to materialise and addressing them has always been difficult to prioritise within the context of an electoral cycle. Unlike the complex adaptive system that is the global economy, demographics is relatively straightforward to model, being largely a function of births, deaths and life expectancy. What is less certain, however, is the impact these trends will have on their respective economies, as the spirit of Thomas Malthus bears testament to.

Debt

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Debt

The last four decades have seen an explosion in public and private debt growth around the world, facilitated by declining real and nominal interest rates and latterly by quantitative easing. Unexpected events like COVID-19 have merely accelerated the trend towards the debt build up.

Road to 2030 - Technology

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Technological disruption

Widespread technological disruption in multiple fields continues to challenge traditional industries and create new products. We think of technology not as a series of objects but as an enabler of the increasing abundance of goods and services, as well as transformations in the workplace, mobility and healthcare.

Painting of a river of lava

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Scenarios

Our scenarios are designed to help stir the imagination and highlight areas of undiscounted change. They ask investors to think through the investment judgment they would make if certain conditions are fulfilled and therefore before the decision actually has to be taken.

Climate change

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Climate change

Climate change, and the world's response to it, will profoundly alter the economy and society. Here we examine the multi-faceted impact on investments, which we divide principally into transition risks and physical risks.

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