China: slowing economy still holds staggering opportunities
Comment of the Day

January 27 2014

Commentary by David Fuller

China: slowing economy still holds staggering opportunities

Here is the opening from this informative column by Jim O’Neill for The Telegraph:

Since the end of 2008 China’s US value of GDP has doubled and is expected to be as big as the US by 2027

China is slowing: there are supposedly bad debts all over the place; the Shanghai stock market index has started 2014 on another disappointing note; and, increasingly, people seem to think the country’s whole economic and business story is coming to an end.

Well, the place might be exceptionally hard to make money out of – not, though, if you pick the right sector – but, judging from the data published earlier this week, China continues to be an increasingly important economy for the whole world.

According to their reported statistics, China grew by 7.7pc annualised in the fourth quarter of 2013, down slightly from the 7.8pc reported for Q3. It brought the annual growth for the full calendar year to 7.7pc, the same as 2012. This confirms that China has been slowing for a couple of years, and many worry that it will slow further in the year ahead.

David Fuller's view

You do not have to look far to see problems in China.  The same can be said for most other emerging markets but China’s size and its efforts to expand and also regulate its version of command capitalism add to the complexity. 

Nevertheless, where China is unique among emerging market is that it has the capacity to exceed the USA in GDP by 2027, according to Jim O’Neill.  I think he is right.  Moreover, China’s stock market is currently cheap relative to most others.  Additionally, China’s growing importance within the global economy means that we should keep a close eye on its developments, if only as part of our overall market awareness.  

Currently, China’s best performing sectors are still in the consumer areas.

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