WealthDFM | March 2021
NINETY ONE
The year of the Ox Ninety One addresses Chinese investment opportunities in the year of the ox.
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s China’s recovery from Covid-19 front-runs other major global economies, during the year of the ox much will hinge on whether China can sustain its recovery and pull other pandemic-weakened economies out of their slowdowns. But China will set the pace in more areas than just economic growth over the next 12 months and beyond.
PHILIP SAUNDERS, CO-HEAD OF MULTI ASSET GROWTH SEES THE POTENTIAL FOR BIG CHANGE FROM THE TRANSITION TO A CONSUMPTION-LED ECONOMY. HE COMMENTS: “China’s evolution into a fully developed economy based on domestic consumption is its biggest current challenge and , if successful, will radically re-orient the World economy and its markets. China had reached the end of the road of a bank financed economic model which was reliant on capital investment and exports as the sheer scale it has now achieved has become unsustainable. This transition to a consumption-led economy will require a dramatic ascent up the value chain, meaning a shift away from supplying western markets with high volume, low value added products, to the establishment of a broad array of local globally competitive producers and service companies – digital leaders such as Alibaba and Tencent already provide a glimpse of this future. Growth will be
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slower, but it should be higher quality and better in terms of returns to investors than the rapid growth of the past two decades.” “US and China relations will also be key in the coming year, with the Biden administration set to continue the more adversarial approach adopted by Trump as opposed to the Obama administration’s more accommodating approach. In contrast to the erratic, “policy by tweet” style of his predecessor we can expect a much more thorough and methodical policy implementation conducted largely behind the scenes and in conjunction with allies. Common ground could be found in the area of environmental policy, and this would represent an important litmus test of Biden’s pragmatism. American companies have much to lose if they are increasingly shut out of China as a market. Paradoxically the United States’ more aggressive policies towards China have served to strengthen its reform momentum and spur growth in a whole series of areas, chief amongst which is technology.”
At a global level, the past year has powerfully demonstrated how important China has now become to global growth
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