China may not fit the mold of traditional emerging markets but that doesn’t mean that it’s relegated to the slow growth rates of the United States or Europe.
The International Monetary Fund (IMF) projects that China’s gross domestic product will grow by 8.2% this year after outpacing its emerging markets peers last year by the most since 2009. In addition, the country’s benchmark stock market rose about 20% last year and the yuan gained more than six percent against the U.S. dollar, outperforming most other emerging markets.
Apart from its domestic growth and performance, foreign investors bought more than three trillion yuans’ worth of Chinese bonds last year through September 2020. Foreign investors also bought US$10.4 billion worth of Greater China equity funds last year through October 2020, which compares to a nearly US$24 billion in equity fund outflows from other developing countries. These trends mark the biggest outperformance since 2007 and signal that international investors are increasingly comfortable with the country.
China’s economy is diversifying away from low-value manufacturing and infrastructure spending toward cutting-edge technology, services and domestic consumption. These trends could make the country’s economic growth much more stable over the long run as frontier markets start to replace the manufacturing base and move into other areas.
Be sure to explore our China-focused mutual funds and ETFs section to explore funds that can provide you an exposure to China.