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Deglobalization: Opportunities in China

29 June, 2023
clock 6 MIN READ

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. 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) 

Important information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. All information as of the date indicated. The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. There are risks involved with investing, including possible loss of principal. The value of an investment and any income from it can go down as well as up. Investors may get back less than the original amount invested. Returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Investment may not be suitable for everyone.

Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI. 

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