Despite being the first to fall prey to the Covid-19 pandemic, China has done well dealing with the scourge as it suppressed the contagion relatively swiftly. At the height of the Covid-19 pandemic, it was responsible for nearly all of the world’s economic growth as it grew 2.3% in 2020. But with global recovery underway, will China lose its “first in, first out” advantage? 

“In the 10 years through 2019, China, on average, accounted for about one-third of global economic growth, larger than the combined share of global growth from the US, Europe and Japan,” says Matthews Asia investment strategist Andy Rothman. He argues that investors have little direct exposure to this tantalising growth proposition. In an average US investor’s portfolio, China only accounts for 3% of holdings. 

Yu Song of BlackRock says that Beijing has pivoted away from maximising short-term growth, focusing instead on more sustainable long-term growth prospects via financial liberalisation, reducing financial risks and improving sustainability among other things. Smaller cities, for instance, says UOB’s Suan Teck Kin, have been discouraged by the central government from building subways, forcing them to pursue more value-added “quality” growth strategies from existing capital. 

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