China is the world’s second largest economy, just behind the US economy in nominal US dollar terms. The rapid economic reform and progression of the last few decades has seen China leap ahead in terms of manufacturing, exporting and importing of goods, to become the fastest growing consumer market.
Even as an emerging market, China is one of the most influential contributors to the global economy. This integration and trade with the rest of the world is a relatively new development, and one which is largely responsible for the jump in economic growth. However, this development did not come without challenges; China is experiencing extreme economic inequality and has not kept up its growth momentum.
In order to maintain their impressive pace, Chinese leaders must encourage domestic demand on its home soil. This will shift the focus away from debt and exports, to selling stocks to prompt growth.
As one of the UK’s leading investment managers, LGIM offers knowledge and experience that can bring real benefit to investors looking to understand economics, policy and politics in China.
Find the updates on the impact of Chinese investment in Africa and the UK, Chinese inflation and important updates on the Chinese stock market. MacroMatters also provide specialist insights and news on the Chinese renminbi.
Our Asset Allocation team includes dedicated and accomplished emerging market economists and strategists whose clear focus is to assess the macroeconomic environment across the China and the emerging world. Our economists then work with our team of strategists and portfolio managers to translate their views into what this means at a portfolio level.
Something remarkable has happened over the past two years: China has started to tackle its addiction to debt. With the authorities finally addressing China’s biggest economic weakness, the medium-term risk to the Chinese (and global) economy should be on the decline.
Without adjustment on the home front, we believe that President Donald Trump's push to reduce the trade deficit is unlikely to improve the US trade balance, or boost domestic employment and growth. However, his outspoken approach and questioning of the prevailing trade system may be the very jolt that global trade negotiators need to update their thinking and move ahead with a constantly changing global economy and patterns of trade.
How does the potential trade war look from China’s angle? Although a full-blown trade war between the US and China is not our base case, there is still a lot to consider. The macro impact currently appears to be very manageable, although even if it all blows over, we observe a tectonic shift in the US-Sino relationship.
What happens when babyboomers retire? Have we saved enough for retirement or are we living beyond our means? Academics argue high savings by prime-aged babyboomers in their 'summer' have depressed real interest rates in recent decades. But the community is split as to what happens next as 'winter' comes.
Emerging market assets have long been a source of both potential profit and peril for investors. 2017 saw an incredible streak of capital inflows into emerging market equities, bonds and currencies. Whilst returns are still characteristically volatile, this historically maverick asset class has become more mature and resilient than ever before, as was highlighted during February's market sell-off.