Amid global chaos, interest in China is rising among investors and consumers: Forum

HONG KONG – International interest in investing in China has picked up amid greater global uncertainty compounded by the ongoing war in the Middle East.

This is a marked difference from only a year ago when many big global investors still considered China “uninvestible”, senior business leaders said at think-tank Milken Institute’s annual Global Investors’ Symposium in Hong Kong on March 23.

China had been viewed as “uninvestible” in recent years due to weak growth, regulatory crackdowns, a property sector crisis and rising geopolitical tensions. Fears of more government intervention, deflation and poor returns affected investor confidence.

“Last year, we were talking about how unloved China was and the scepticism that foreign investors have (towards it, but now) there’s been a thaw, particularly from the Europeans, while the Americans are slowly warming up,” said Mr Aaron Costello, Asia head of Boston-based global investment firm Cambridge Associates.

“I’ve had more conversations with clients about whether we should invest in China, arranging trips to get on the ground,” he said on a panel at the symposium themed “Capital in a Changing World”, which was attended by some 500 senior executives from a range of industries.

Mr Costello attributed the change to improving US-China ties, as US President Donald Trump now appeared “even more desperate” to strike a trade deal with Beijing for “some sort of good news” on the back of the US-Israel war in Iran.

“The geopolitical risk premium in China has shrunk,” he said.

Mr Hoi Tung, chief executive of China’s biggest insurer’s offshore investment arm Ping An Overseas Holdings, shared the observation.

“Many investors are thinking about re-engaging China, which used to be (thought of as) ‘uninvestible’ since the 2019 pandemic until around last year,” Mr Tung told the symposium, held at the Four Seasons Hotel in Central.

Perceptions have changed, thanks to China’s relative stability, greater market confidence, and the likelihood that its economic slowdown has bottomed out, the CEO explained.

While the Chinese economy “is not doing great” with “very lacklustre” domestic consumption, its exports are performing well and the country’s growth rate remains stable at around 4.5 per cent, he noted.

Mr Tung added that he was reviewing whether to trim his firm’s significant exposure in the US, given the market volatilities brought on by the conflict in the Middle East.

Some 90 per cent of Ping An Overseas’ US$60 billion (S$77 billion) portfolio based outside China was invested in America, he said.

Mr Tung said he saw “huge potential” for investors to finance the Chinese manufacturers shifting from low- to high-end manufacturing, given that China commands a third of the global manufacturing capacity.

China is also dominant in making electric vehicles, batteries and renewables equipment, and enjoys a large talent pool of trained engineers, he noted.

Other strong investment options include the artificial intelligence and biotechnology sectors – China’s large language model development is only “three to six months” behind that of the US, the global front runner, and it accounts for “50 per cent of the global pipeline” for innovative drugs, he added.

At another panel at the symposium, Mr Kenneth Gaw, president of Hong Kong-based private equity real estate firm Gaw Capital Partners, suggested diversifying investment portfolios into digital- and renewable energy-related infrastructure, as his firm has done.

“We need data centres to power AI, and without energy, those computers and chips (in the data centres) won’t work,” he said. “These are important… because they will drive growth.”

Mr Gaw was upbeat about China’s competitive edge against the US as the two major powers jostle for global AI dominance.

“The US may have denied China (its advanced AI) chips, but China has another big advantage: It has no power deficit,” he said.

“China has all the solar power in the world, it has the best battery technology, it’s building more nuclear power plants than anywhere else in the world and the biggest hydropower facility as well. Also, its power grid system is world class, piping solar power directly from the desert to coastal cities.”

Unlike the US, Mr Gaw said, “China does not have a power problem”.

“So despite its lack of cutting-edge AI chips… we have really seen China keeping pace with the US in the AI race. And I think nobody will be surprised if, one day, China actually overtakes the US (in that aspect),” he added.

Mr Kevin Lu, Asia chairman of Swiss-based global private equity firm Partners Group, observed that Chinese investors are now also more keen to take their capital to Europe and South-east Asia.

“There is a historic level of interest in both sovereign and private capital from Greater China wanting to be more connected to markets in Europe and the rest of Asia,” he said.

Global investor interest, meanwhile, has “clearly pivoted” to China, he added.

Beyond the investment landscape, even consumers worldwide are exhibiting a growing interest in China, according to Mr David He, who spoke on a third panel at the symposium.

Mr He is a founding partner of Shanghai-based venture capital firm BA Capital, which is best known for being an early investor in China’s successful “blind box” toy franchise Pop Mart.

“We have noticed a trend on overseas social media platforms over the past year of foreigners discussing China,” he said in Mandarin, adding that the trending tag called “Becoming Chinese” had been shared more than 1.5 billion times.

“They are learning how Chinese people speak, and learning Chinese ways, like drinking boiled water, eating goji berries, soaking their feet in buckets and wearing slippers,” Mr He said, referring to Chinamaxxing, the internet trend of embracing Chinese culture and practices.

“This shows that young people overseas see China as quite a stable and relaxed place.”

The venture capitalist regards the trend – particularly prevalent among Gen Z social media users in the West – as a boon for Chinese soft power.

“Although there may be mixed reception to the meme, I think it is good that it allows us to interact and exchange ideas with the outside world, and can also help promote the globalisation of our Chinese brands,” he said.