{"id":1536,"date":"2021-11-03T16:55:43","date_gmt":"2021-11-03T20:55:43","guid":{"rendered":"https:\/\/www.nepc.com\/private-wealth\/?post_type=newsroom&p=1536"},"modified":"2022-03-28T16:58:33","modified_gmt":"2022-03-28T20:58:33","slug":"chief-investment-officer-broken-china-maybe-things-arent-so-bad","status":"publish","type":"newsroom","link":"https:\/\/www.nepc.com\/private-wealth\/newsroom\/chief-investment-officer-broken-china-maybe-things-arent-so-bad\/","title":{"rendered":"Chief Investment Officer: Broken China? Maybe Things Aren\u2019t So Bad"},"content":{"rendered":"
[vc_row][vc_column width=”1\/1″][vc_column_text uncode_shortcode_id=”911659″]Phillip Nelson was featured in a recent Chief Investment Officer article. View the article on Chief Investment Officer’s site here<\/a>.<\/p>\n

<\/p>\n

China may be a rising economic and military power threatening the US\u2019s global hegemony, but its home-front fortunes have dimmed a lot lately. Small wonder its stocks have tumbled. The\u00a0iShares China Large-Cap ETF<\/a>\u00a0(exchange-traded fund) has slumped a breath-catching 13.6% this year.<\/p>\n

But Phillip Nelson, NEPC\u2019s director of asset allocation, argued in a recent video\u00a0briefing<\/a>\u00a0that China will get over its current travails. \u201cWe\u2019ll see a more volatile path in the next several years,\u201d he said. After that, \u201cChina is set up for strategic success.\u201d<\/p>\n

The plain fact is that China is still growing strongly, albeit not at the double-digit pace it has in previous years. There\u2019s still the prediction that it will overtake the US as the world\u2019s biggest economy\u2014perhaps as early as 2028, says the\u00a0Centre for Economics and Business Research<\/a>\u00a0(CEBR). By opening itself to private enterprise, it got the fuel it needed to grow from a backward rural land to its current position, sporting the earth\u2019s second biggest gross domestic product (GDP).<\/p>\n

The Chinese economy, which downshifted to just 2.3% \u00a0growth last year at the pandemic\u2019s outset, should accelerate to a 10.1% pace, according to\u00a0the World Bank<\/a>\u00a0and Pantheon Macroeconomics. Of course, predictions of China\u2019s eventual supremacy have attracted much skepticism recently, in light of the nation\u2019s troubles.<\/p>\n

Nelson ticked off the nation\u2019s many weaknesses, chiefly its regulatory crackdown on its tech giants such as Alibaba and Tencent. China skeptics often declare that Beijing\u2019s heavy hand on the capitalists that are so key to the country\u2019s success will prove to be self-defeating, with much talk about slaughtering gooses capable of producing golden eggs. Another drawback is the huge debt that its overbuilt housing and commercial sectors have taken on. That situation has led to the precarious standing of Evergrande Group, China\u2019s largest real estate developer, now teetering on the brink of default.<\/p>\n

Chinese stocks \u201chave been in a bear market,\u201d Nelson said, \u201calthough there\u2019s been a recovery in the last 20 days.\u201d Nelson also noted that small-cap Chinese stocks, which typically have little to do with exports, are ahead this year, by an admittedly weak 3%. He pointed out that China\u2019s large portion of the MSCI Emerging Markets Index (34%) had helped drag down the stocks of other developing nations. That\u2019s not solely a function of equity valuations; the reduction of China\u2019s appetite for raw materials in the pandemic\u2019s early stage was harmful to them.<\/p>\n

The slump has turned around this year as China\u2019s factories reopened and its imports of commodities zoomed upward, helping to drive price hikes worldwide. To be sure, China\u2019s new expansion has run into obstacles, chiefly computer chip shortages and flooding in the north-central region. Counter-balancing these are thriving exports and increased consumer spending, often for restaurants and other services.<\/p>\n[\/vc_column_text][\/vc_column][\/vc_row]\n<\/div>","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column width=”1\/1″][vc_column_text uncode_shortcode_id=”911659″]Phillip Nelson was featured in a recent Chief Investment Officer article. View the article on Chief Investment Officer’s […]<\/p>\n","protected":false},"author":95,"featured_media":1537,"template":"","meta":{"content-type":"","footnotes":""},"newsroom_categories":[81],"newsroom_tags":[82,83],"class_list":["post-1536","newsroom","type-newsroom","status-publish","has-post-thumbnail","hentry","newsroom_categories-in-the-news","newsroom_tags-press","newsroom_tags-press-coverage"],"yoast_head":"\nChief Investment Officer: Broken China? 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