Middle-class growth keeps China as an investment destination
China is still a strong investment destination as the nation is preparing for another round of growth as its population becomes wealthier and discretionary consumption increases, according to Premium China Funds Management (PCFM).
Jonathan Wu, PCFM chief investment specialist, said investors needed to recognise the way the nation had succeeded in lifting its population out of poverty.
“It is an extraordinary historical event with something like half a billion people lifted out of poverty in little more than a generation; hundreds of million more will follow soon,” Wu said.
“What is more, China has achieved that demographic change in much the same way as the other major Asian growth economies such as Korea, Japan and Taiwan albeit it has the advantage of an autocratic style of Government.”
China’s overall consumption of services was also low by international comparisons standing at 33% of consumer spending compared to 55% in Taiwan and 69% in the US.
PCFM identified technology, healthcare and education as specific growth areas that deserved focus.
Wu said that US pharmaceutical expenditure as a percentage of gross domestic product (GDP) stood at 15.2%, while that of France stood at 11.2% and China currently stood at just 5.1%.
“So, allowing for China’s population and its growing wealth, you can see the investment potential,” Wu said.
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