In this issue of Sinology, we provide a macro perspective for thinking about whether an investor’s portfolio has enough exposure to China. We bust a few misconceptions—for example, private (not state-owned) companies are the engine of China’s economy—and explain how the country has become the world’s best consumer story. We assess the sustainability of China’s growth trajectory, and examine the key risks, from real estate to shadow banking and demographics.

Introduction: China drives global growth

China drives global economic growth. Do you have adequate exposure to China in your portfolio?

In the 10 years through 2019, China, on average, accounted for about one-third of global economic growth, larger than the combined share of global growth from the U.S., Europe and Japan.


SI073_Figure 1_IMF World GDP_WEB-01-min.jpg

In 2020, China probably accounted for almost all of the world’s economic growth, as was the case during the global financial crisis. But that will likely return to “only” a one-third contribution this year.

SI073_Figure 2_GDP for 2020 YoY_WEB-01-min.jpg

At the same time, most investors have little, direct exposure to this driver of global growth. We estimate that in the average American investor’s portfolio, China accounts for only about 3% of holdings.

In this issue of Sinology, we provide a macro perspective for thinking about whether an investor’s portfolio has enough exposure to China. We bust a few misconceptions—for example, private (not state-owned) companies are the engine of China’s economy—and explain how the country has become the world’s best consumer story. We assess the sustainability of China’s growth trajectory, and examine the key risks, from real estate to shadow banking and demographics.