(This article is courtesy of the Shanghai Daily News Paper)
Investing In China: Too Big To Ignore
MANY American investors focus solely on the U.S. economic cycle and ignore the rest of the world. But sophisticated family offices are now paying a lot of attention to China as well. China has become the world’s second largest economy, the primary consumer of many commodities, and a key driver of global growth. According to HSBC, China consumes more than half of all global aluminum and nickel production, and close to half of global copper and zinc production. China is the second-largest importer of crude oil, and is on track to surpass the United States in total demand for oil.
China has also been a key source of opportunity for U.S. multinational companies. For example, China accounts for 25% of Apple’s revenue. Five years ago, China accounted for only 11% of Apple’s revenue. Chinese monetary and fiscal policy also has global consequences. Investors will remember that in August 2015 China surprised investors with a 2% depreciation of the yuan. Global stock markets tumbled on fears that China’s growth would slow, and bond yields crashed as investors worried about the deflationary impact of a larger Chinese currency devaluation.