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China is pursuing its own transformative path to growth.
Participate in this unique investment story.
Why now is the time to reconsider China
China is changing. Its economic growth is increasingly driven by innovations and investment in technology, data and science. Its capital markets are developing with a similar energy, on their way to becoming an integrated part of the global financial system.
Now is the time to get ahead of the opportunities as an investor.
Innovation, transformation and investment: key drivers of China’s growth
Advanced-manufacturing sectors such as ecommerce, biotechnology and electric vehicles have the potential to add more value to China's economy than traditional manufacturing, and investment flows reflect this. China's leadership role in these areas ensures that it will no longer be seen as a country that imitates others’ success.
What will the “China of the future” look like?
Some of China’s most significant transformational efforts include the success of domestic brands, a growing emphasis on sustainability and a commitment to leadership in advanced technologies. Supported by investments in R&D and infrastructure, these transformations are set to change the face of the Chinese economy over the coming decades.
The rise of domestic brands
Improvement in product quality is boosting dominance of local brands
In 2010, only 10% of smartphones sold in China were domestic brands; now it's close to 90%
Becoming a green pioneer
China plans to achieve carbon neutrality by 2060 (and peak CO2 before 2030)
China has been the largest investor in renewable energy over the last decade
From imitation to innovation
Healthcare: drug development is surging; China is the world's largest genetic databank
Cryptocurrencies: watch out for the first truly digital currency in a major global economy
Are you taking the right approach to investing in China?
No matter whether you're new to investing in China or someone with extensive experience, it may be time to take a fresh look at your existing approach.
Some of the biggest global benchmarks have already increased their China allocations. These are the indices against which many portfolios are constructed. Yet while China is due to become the world’s largest economy by 2030, its current weight in benchmarks is a fraction of the existing biggest economy – the US. Consider allocating more to China than the benchmarks.
It could be time to view China as its own asset class – one that may deserve a dedicated, standalone allocation. You can even start by making small changes to what you have. Adding even a small amount of China A-shares to an emerging-market allocation may be able to help improve your risk/return profile.
Investing in China using only passive, index-tracking vehicles means missing out on the value that active management seeks to add. For example, China equities can be volatile, with valuations making large movements both up and down. This can, for example, be seen during the regulatory challenges and Covid-19 lockdowns in 2022. Active managers help add a layer of risk management to every investment decision.
How can China help diversify your investments?
China’s markets have historically exhibited low correlations to other major markets – meaning they frequently move in different directions. This means investing in China can bring diversification benefits.
Equities are available in a range of exchanges – from Shenzhen and Hong Kong listings to the Nasdaq-like STAR market.
Bonds can be accessed in onshore and offshore markets, and denominated in US or Chinese currencies, to achieve a range of diversification objectives.
Our China expertise is deep and broad
In many ways a unique market, China is still unfamiliar to many investors. Partnering with someone who understands this dynamic region is critical. At Allianz Global Investors, we have a wealth of research capabilities across our investment platform, including proprietary insights from our Grassroots Research® team, with correspondents in China and across Asia.
Explore further China insights
Our experts regularly provide investment insights about China, keeping you up-to-date about this dynamic region.
Infograph: China’s path to growth
1. Source: eMarketer. Data as at 2020.
2. Source: Statista. Data as at 2020.
3. Source: Asian Bonds Online. Data as at 31 December 2020.
4. Source: World's Top Exports. Data as at 2019.
5. Source: OECD, Allianz Global Investors. Data as at 2018.
6. Source: World Intellectual Property Organization. Data as at December 2019.
7. Source: Goldman Sachs. Data as at July 2020.
8. Source: Hurun Research Institute, Nikkei Asia review. Data as at 2019.
9. Source: Belfer Center for Science & International Affairs.
10. Source: IMF. Data as at 2021.
Infograph: Allianz Global Investors’ China expertise
Source: Allianz Global Investors. Assets under management data as at 31 January 2021.
Grassroots Research® is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate Grassroots Research® reports are received from independent, third-party contractors who supply research that, as far as permissible by applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.
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