As Covid-19 challenges both governments and the global economy, China is the only major economy forecast to grow this year. Yes, the world’s second-largest economy bucks the global trend in this regard, but more importantly, it helps keeps its tech ambitions on course.
There is common agreement between investors that bifurcation between China and the West will continue to accelerate, and technology is the key arena in which this will play out.
This presents a bigger investment opportunity set to the wider world. Considering it has the second-largest equity and bond markets globally, with very low rates of foreign ownership, it is little wonder that international money managers are queuing up to access this sizeable market.
Twelve months is too short a time to determine long-term outcomes – particularly during times of volatility – but the groundwork is being laid as routes to investing into onshore China become easier.
One key area of development will be ESG. The pandemic has highlighted that this is a vital risk-mitigation tool and key to good societal outcomes, but there is a recognition that progress still needs to be made as it becomes increasingly important in China and globally. This is an area that will be closely watched and charted as foreign investment and involvement in China deepens.
Romil Patel, Funds Global and ESG Editor
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