Developed nations are increasingly interested in bringing jobs and manufacturing capabilities back to domestic shores.
Deglobalization: Opportunities in China
Given that nearly 30% of the world’s manufactured goods are produced in China.1 a global homecoming could have a detrimental effect on the country’s economic growth. Add in the threat of geopolitics hindering the global supply chain, many investors are questioning the value of investing in China. At SEI, we see more than a billion reasons to invest there.
Deglobalization has already begun to lead to a less connected world. Rising nationalism, global supply-chain disruption stemming from the COVID-19 pandemic, and geopolitical tensions have caused many consumers to look for locally sourced goods and services. Investors, it seems, have been no different. At SEI, we have been increasingly asked about the merits of investing outside of developed markets―particularly in China.
Notwithstanding recent challenges brought by the COVID-19 pandemic and slowing economic growth, China is a different story. We continue to view China as a burgeoning economic powerhouse with significance to the rest of the world.2 What makes China unique? In part, it has 1.4 billion people looking to put their money to work. Even though the population is slowly declining, 1.4 billion people is greater than all developed markets combined.
1. According to data published by the United Nations Statistics Division, China accounted for 28.7 percent of global manufacturing output in 2019. (Statista Market Insights, 2021)
2. To illustrate, as of January 2023, China is the second-largest holder of U.S. Treasury debt, at $859 billion. (Statista Market Insights, 2023)
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