China’s Emerging Markets

October 21st, 2017 by admin Leave a reply »

Emerging market economies – most notably China and India – are expanding faster than those in developed nations.  With this growth, emerging market companies are able to offer potentially attractive returns to long-term stock investors, while bond investors can reap the benefits of generally higher interest rates than in developed markets.

According Tao Zhang, IMF Deputy Managing Director it is crucial for emerging markets at this point to remain “vigilant” to potential risks.  China’s economy is currently encountering substantial changes during its transition to a consumption-led economy which moves away from dependence on cheap good exports. As such, it is vital leaders are aware of the “rapid credit expansion.”

Still, at the latest World Economic Outlook, the forecast for China’s economic growth (this and next year) was increased to 6.8 percent (2017) and 6.5 percent (2018); a 0.1 percentage higher than July forecasts.  The region’s economic growth is mainly due to progress within economic reforms, in particular, supply-side structural measures along with the capacity of the government to maintain a stable macroeconomic policy.

It should also be noted that there is a targeted urban area population increase in 2020 of 60%, translating into a move of 41 million individuals from rural areas to urban centers in China.  What this means is that there will likely be significant investment opportunities given that urban residents have different consumption patterns and higher wages.


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