What Are Your Top of Mind Concerns?

I asked the participants what are their top of mind concerns about China.



December 30, 2021
What Are Your Top of Mind Concerns?

To begin the CHINARoundtable, I asked the participants what are their top of mind concerns about China.

  • Here are a few of the responses:

Shang-Jin Wei, speaker

‘Globally, the inflation risk has been greatly underestimated by central banks for too long.’

  • ‘Once central banks start to raise interest rates, we're going to see essentially a wave of crises in emerging markets

‘As is often the case, higher interest rate in advanced countries tend to be followed by combination of a debt crisis, a currency crisis, and some domestic banking crisis.

  • ‘So in the next few years I would expect to see a wave of crises.


1 | Fund Manager

‘On top of my mind is with the huge correction in equity markets, what are the additional risks we're seeing going into 2022?’

  • ‘What are the risks that are not priced in right now?’

2 | Fund Manager

‘The biggest concern I have in China is actually getting the true picture of economy.

  • ‘From what I've heard, China actually has a decent amount of unemployment, and property is definitely still a little bit messy.
  • And it looks like the government is really not going to do a very drastic stimulus.

‘Just kind of want to get a true picture as what's going on in China right now.

3 | Fund Manager

‘The two questions I'm very interested are:

  • ‘First, from the US side, the risk coming from the US, not from the US-China tension, but politically from the US side: What will be the top U.S. priority to tackle relating to Chinese equities and the Chinese economy?
  • ‘The second thing I'm interested in is on the opportunity side coming from China both in 2022 and in the medium and longer terms given the strategies that the Chinese government is pushing: What sectors are going to do better going forward?’ Essentially, what are the attractive opportunities that especially global investors tend to overlook?.

4 | Fund Manager

‘My biggest concerns in China are really two, a short-term concern and a long-term concern.

‘The short-term concern is the extent to which we're going to see easing next year.

  • ‘It’s clear that easing is coming but how much - I think will be very important when it comes to market impact. So that's a large uncertainty.

‘And then the long-run concern, besides geopolitics (which is I think very hard to handicap but very, very important) is from a more monetary or economic standpoint.

  • ‘There is a very large discrepancy over the last few years between the growth in monetary aggregates or credits and the relative flattening of FX reserve accumulation.
  • ‘In the long run could be a significant issue for the currency.

5 | Fund Manager

‘We intend to launch a new multibillion dollar global emerging market fund within four months.

  • ‘So there is a bit of stress not to make the wrong decision and to overweight or underweight China. Is it the right timing?

‘The brokers and consultants tell us,

  • ‘ “Don't worry, China will be better next year.” ’
  • ‘ “The real estate market has The government will stimulate next year. Everything is under control.” ’

‘But I don't buy this story. I'd like to think a bit deeper.’

  • ‘Stabilize? Okay why? What's the percentage of probability that they will effectively manage to stabilize things?’
  • ‘What about investment? How will China react if exports start to ail a bit - because at the moment that's the only engine that can sustain China's economic growth.

‘So I'm interested in the big picture and what can go wrong and to quantify that so that it can help us to make a good investment decisions.

6 | Fund Manager

‘Top of our mind, aside from how much we should invest in China, is obviously trying to understand the risks related to

  • ‘Contagion, how much contagion could have outside the construction and real estate?
  • ‘Tail risks related to geopolitics, obviously, between the US and China and Taiwan.
  • ‘The tailwinds for the economy. What are the key sectors and segments that we will likely benefit from Chinese policy?

7 | Fund Manager

‘My big question is what the Xi administration really wants to accomplish. It seems to me that he's changing a direction of the country away from Deng Xiaoping's policy.

  • ‘And as an investor, I'm very concerned about how the private companies are going to fare in this new regime.’

8 | Strategist

‘For me, maybe the biggest risk next year is going to be the impact on markets and market sentiment by a continued deterioration in US-China relations

  • ‘I'd love to get people's thoughts on the impact on markets and sentiment on that and whether or not it's going to have an impact on the Chinese economy as well.

China Expert

‘My firm run the largest private data collection operation in the world inside the Chinese economy.

  • ‘Some of the things that I'm concerned about are different than what others are concerned about in this call

‘We have a pretty good handle on property and retail, which I think more people are worried about and we're less worried about.

  • ‘Pretty good handle on credit and what's going to happen in terms of easing next year at least in the early going.

‘What's most interesting to me, the big unknown, is what's going to happen with Omicron.

  • ‘For a long time, we watched COVID develop. We track it inside the economy.
  • ‘Even though the Chinese dramatically under report COVID cases, it's very clear that they by and large had both the original COVID and the Delta variant under control.

‘Omicron may pose a completely different problem because of its transmissibility.

  • ‘When we look at the service sector ourselves, we think it's weaker than what people are looking at right now.

‘The service sector going into next year is a real point of weakness.

  • ‘And how Omicron goes here will be extraordinarily decisive in that sector and thus on how good or bad a year China has in 2022.

Real Estate Developer Executive

‘I'm curious about how contained the Evergrande crisis is and whether you see that as roiling the real estate market and more broadly the economy.


‘We are very engaged with the Chinese data, which we rarely trust and at the moment it seems particularly difficult to piece together what's really happening.

  • ‘I agree that the labor market data in particular seem to not be revealing reality at all.

‘I think lower frequency cycles and higher frequency cycles in China are interesting how China reflects the global what I call spaghetti bowl of strange pandemic data.

  • ‘And where they are in the normalization process and where they are just with regard to their ordinary domestic longer-term developments are all big issues at the moment
  • ‘As are the geopolitical concerns we should be monitoring as well. So hopefully we'll learn all of that today.



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