China in the balance
August 06, 2020

China in the balance

Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi Asset Strategist

China continues to invest more than other nations. That may depress capital efficiency. However, saving is even higher, which makes China self-financing and more balanced than many countries.

The title of this document could refer to the recent increase in Covid-19 cases and deaths in China but it doesn’t. Equally, it could refer to China’s increasing isolation on the world’s geopolitical stage. Again, it doesn’t. What is referenced is the thorny question of whether China’s economy is out of balance.

It is received wisdom among many commentators that the Chinese economy is fundamentally imbalanced, the only questions being to what extent and with what eventual consequences. Over recent years we have published extensive picture books about China and its financial system to test that hypothesis and have generally concluded that, though there are some issues, the problems have been greatly exaggerated.

For our full report and a more in-depth assessment click here.