Posted February 17, 2018 12:58 pm by Comments

In this Lunar New Year, the stars seem to be aligning for China. President Xi is providing steady leadership, “One Belt, One Road” is spurring massive regional investments, China’s R&D spend could soon overtake the US and A-shares will be added to MSCI’s emerging-market index in May.

Key takeaways

  • President Xi is putting China in a good position for an extended period of continuity and managed change
  • China’s reform and rebalancing efforts could benefit from a government that has a decision-making horizon measured in decades
  • China’s trade surplus with the US could enter President Trump’s cross-hairs this year, but the US is extremely import-dependent and in a weak position
  • China’s mega-cap tech firms – the BATs – are modernizing its economy and creating a new ecosystem of investment
  • China is not without its risks, including a significant debt-to-GDP ratio, but the biggest risk for many investors today could be an “unconscious underweight” to Chinese equities

When the Chinese Lunar New Year begins on 16 February, we will usher in the Year of the Dog – and the first “earth dog” year since 1958. This seems like an auspicious start not just for China, but for Asia at large. Dogs are seen to be loyal, trustworthy and reliable, and earth dogs are viewed as quietly self-confident and hard-working. So in contrast to the volatility that dominated the Year of the Rooster in 2017, here are a few ways in which we could see some canine constructiveness taking root in China this year. READ MORE

 

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