I have no problem investing in China — if there’s money to be made (2024)

FAQs

Is it risky to invest in China? ›

Some of the risks associated with investing in China include its communist structure, regulatory differences, and insider trading. Investment opportunities in China include U.S. corporations that have a presence in the country, mutual funds, and ETFs.

We look at the case for investing in China again. China's gross domestic product grew by 5.3% year on year in the first quarter of 2024, a result above market expectations, and even higher than the already ambitious target that the Beijing government had set itself.

Economic growth in China

The Chinese economy grew by 5.2% in 2023, with the International Monetary Fund (IMF) pegging 2024 growth at a more moderate 4.6%. Yet, debt, deflation and an aging demographic base point to serious concerns for global investors.

China has accumulated advantages to back up its outstanding position in the global market and maintain investor confidence, including a huge market growth potential, a skilled labor pool, unparalleled infrastructure, and investment in its capabilities as a manufacturing base for industries of the future.

Governmental Risk & Reward

The bureaucracy involved in negotiating with the state can slow down the pace of business ventures. Joint ventures are difficult to establish because they have substantial government involvement. Legal matters lack consistency and can be changed at the will of the Chinese government.

It remains in negative territory now, having been so since last October. Meanwhile, China's GDP growth rate has been on a consistent decline, falling from 12.2 % in the first quarter of 2010 to 6% in the fourth quarter of 2019. From 2020 to 2022, China's average annual growth rate was about 4.6%.

The easiest way to invest in the whole Chinese stock market is to invest in a broad market index. This can be done at low cost by using ETFs. On the Chinese stock market you'll find 12 indices which are tracked by ETFs. The speciality of China are the three categories of Chinese stocks: A-stocks, B-stocks and H-stocks.

Despite these challenges, China remains an attractive market for many organizations. The country offers unparalleled access to one of the world's largest markets and a highly competitive global supply chain.

Hong Kong, the Virgin Islands, Japan, Singapore and the United States are among the major investors (data U.S. Trade Administration). Investments are mainly oriented towards manufacturing, real estate, leasing business and services, and computer services.

BEIJING -- Investment in China by companies based abroad has sunk to the lowest level in 30 years, according to official data released on Sunday, in a sign that foreign corporations are leaving China due to tougher crackdowns on spying and U.S. sanctions.

Why are people not investing in China? ›

The two main arguments for the Chinese stock market falling over the last couple of years are the politicisation of the country's economy and its deep structural challenges, which include over-reliance on property investment to mop up high savings rates.

Therefore, the question you should be asking yourself – is now a good time to buy the Yuan? The answer – yes. The Yuan is strong and there are no signs of weakness in sight. The American Dollar is having issues trying to stay afloat and the Chinese are capitalizing – as they always have.

Raids on foreign businesses in China, unclear state secrets laws and tightening rules on handling of data have generated unease among many foreign business people in the country.

However, foreign companies are concerned because of uncertainties over how China will implement its policies regarding national security and other areas, as well as structural reasons for the slower economic growth.

Our findings show that the return to capital in China maintained a high level of 21.9 percent during the last three decades— even higher than those in Japan, which was over 10 percent.