China was ‘first in, first out’ of the COVID-19-prompted crisis. Manufacturing activity largely recovered throughout the summer, most offices in Shanghai are fully open and operational, face-to-face business meetings with companies and clients are back. World economies are likely to be several quarters away from returning to pre-coronavirus levels, although they have gradually gained some ground in Q320. China is the only exception, and its economy is expected to grow at 1.9% (source IMF at 13 October 2020) in 2020 and accelerate further to 8.2% in 2021. This compares to the advanced economies’ contraction of 5.8% in 2020 and the return to growth at 3.9% in 2021. With multiple global political and economic uncertainties in Q420, such as the US presidential elections, Brexit and the overall handling of the current economic crisis, China looks to be in a stronger position than most of the developed economies, particularly in the West.
China’s unsurpassed economic success of the past 40 years has created compelling investment opportunities. The country’s middle class has become the largest in the world, and its economy and domestic stock market are the world’s second largest. US-China competitive tensions tend to centre around technological developments and innovation, as China has proven its ability to deliver world-leading companies through investment, innovation and support. The shift between the ‘old’ and ‘new’ economy sectors continues, as rapidly growing e-commerce, online payments, renewable energy and healthcare industries begin dominating over more traditional stalwarts of the Chinese economy, such as construction and manufacturing.
The country continues to face risks, however. These include trade tensions with the US, weak overseas demand, an increase in the volume of bad debts held by Chinese banks, poor disclosure on the corporate side and weak internal consumer demand for services. Globally, a lot of misconceptions about Chinese companies, and a strong bias against them, remain. Many investors still see China as a manufacturing economy with inferior corporate standards from an environmental, social and governance (ESG) perspective, and lacking technological innovation. The effective handling of the COVID-19 crisis by the Chinese has arguably accentuated a shift in this perception. More investors begin eyeing China, as it is rapidly demonstrating its progress towards becoming an engine for global growth.
As China has not significantly expanded its balance sheet during the crisis, has sensible interest rates and decent growth, it looks increasingly attractive for…
"Disclosure: Ballie Gifford China Growth Trust and Fidelity China Special Situations are Edison clients"
So, does this mean the above is Edison "research" or a rehash of Edison "research"?
