China is navigating global tensions with some detachment. Growth accelerated to 5% in the first quarter, up from 4.5% in the previous quarter. Exports, high-tech output, and earlier stimulus measures are supporting this growth.
Despite its deep integration into global trade and the likelihood of being affected by a broader slowdown, China has strengthened its resilience.
Energy is a structural constraint. This prompts China to focus on self-sufficiency. China is actively diversifying its energy mix and sources of supply.
Renewable energy is gaining traction. Coal and nuclear remain relevant. With less access to Venezuelan and Iranian oil, China turns to Russia and African producers.
Industrial upgrading and competitiveness
China’s domestic market fosters intense competition, encouraging firms to innovate and scale. Those who succeed domestically are often well-positioned to expand internationally.
The country is shifting to higher-value, technology-intensive production. It was once known for low-cost manufacturing. Now it is a credible competitor to developed economies in many sectors. Industrial production rose by 5.7% year-on-year in March. High-tech manufacturing expanded at nearly twice that rate. Industries such as robotics grew even faster.
These structural strengths reinforce China’s appeal for portfolio diversification. Based on these trends, our strategy maintains investment in Chinese stocks, reflecting our recommended asset allocation.
