Why Now and Why China?
A comprehensive comparative analysis of global economies, prioritizing investments to industries in which China holds a clear comparative advantage over the medium to long term.
Asynchronous Economic Cycles with the U.S.
When the U.S. economy enters a downturn and investors seek low-correlation markets to manage risk, China naturally becomes one of the top choices. Among major economies, China’s economic cycle is almost counter-cyclical to that of the U.S. While the U.S. continues to battle inflation with persistently high interest rates, China faces an entirely different scenario—prolonged deflation has pushed long-term rates down to around 1.6%. At a time when concerns over U.S. debt threaten the dollar’s credibility and value, the renminbi has quietly begun to appreciate—even amid trade tensions. No other major economy complements the U.S. as effectively as China. By building a portfolio based on high-quality companies from both countries—global tech leaders from the U.S., and high-potential advanced manufacturing firms from China—alongside strong consumer brands in both markets, investors can create a well-balanced and highly competitive global portfolio.
China’s Economic Resilience and Policy Headroom
Despite the bursting of the property bubble and ongoing trade tensions, China’s economy has demonstrated remarkable resilience. This stems from the vast potential of its consumer market and recent efforts to close critical gaps in advanced manufacturing. As the property market stabilizes, further deterioration in debt risks appears unlikely. Policy direction has already shifted meaningfully, leaving significant room for fiscal expansion. Notably, many leading Chinese companies are expanding abroad, showcasing strong competitiveness underpinned by R&D and technological strength—positioning them to benefit from the continued wave of globalization. In contrast, the U.S.-China trade war has acted more as a one-time external shock rather than a fundamental blow to the core competitiveness of Chinese leaders. In fact, the resulting pessimism has created a compelling entry point for long-term value investors.
Undervalued Market with Strong Domestic Liquidity
Valuations are at historic lows due to property and debt issues, but liquidity is ample. The economy is rebounding, led by consumption and manufacturing. Long-term investments in AI, smart EVs, and advanced semiconductors are creating structural growth opportunities. The economy is likely to exit deflation, with a turning point toward high-quality growth ahead.