China's Century?Mar 28, 2019

Key Points

  • China is at a crossroads. After years of heady growth, it now faces a potent mix of external and internal challenges that threaten to curb its momentum. Its prospects will hinge on how well it responds to these challenges, on top of broader policy dilemmas. High on investors’ list of concerns are the US-China trade standoff and China’s economic restructuring.
  • “New economy” programs and policies that favour innovation are beginning to give China an edge over developed markets. Consumer-focused initiatives offer opportunities both to stimulate the economy and support the pursuit of a better life for China’s citizens.
  • Our near-term outlook for China is cautious with the potential for volatile markets as the country navigates challenges. We expect China’s economic growth to slow over the next few years as de-risking becomes a priority. But we do not foresee a hard landing, given strengths in its policy execution ability and economy. We believe the future still holds promise for China, if its rebalancing efforts result in an economy that is sturdier and more sustainable.