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Insight 22.11.2023

Looking Beyond China

Looking Beyond China

As UBP launches into Investment Outlook 2024, this year titled Back to the Future, our Co-CEO Asset Management & Head of Investment Management Michaël Lok, Group Chief Strategist Norman Villamin, and Chief Economist Patrice Gautry shine a spotlight on one of its key themes: looking back at events that have led China into a post-bubble restructuring process. Our expert recommends that during this phase China-focused investors look beyond the world’s second-largest economy at other dynamic markets, such as India.


Like post-1989 Japan, post-1998 Asia, the post-2008 US, and post-2011 Europe, China is in a post-bubble economic restructuring phase. The country announced its move away from real estate-led growth in 2011 However, it was only with President Xi Jinping’s December 2016 exhortation that “houses are built to be lived in, not for speculation” that the painful restructuring of its bloated real estate sector began in earnest. 

Indeed, lessons from post-1989 Japan show the perils of delaying restructuring and reform. Thus, while calls for large-scale stimulus packages have been persistent in the face of growing economic stress, China now appears to be seeking, as indeed it should, to continue unwinding real estate excesses.

Unlike post-bubble economic restructurings of the past, this one in China is being complicated by the shifts in the geopolitical order. They began with the Trump trade wars of 2018–19 and were accelerated by Russia’s 2022 invasion of Ukraine, limiting China’s ability to rely on currency weakness and export growth to cushion the impact of reforms on overall economic growth. 

For investors, lessons from other post-bubble economies globally suggest that passive investments in China should be avoided. Instead, tactical investors should focus on the global industrial cycle while China-focused investors should concentrate on longer rather than shorter time horizons in new economic growth segments that will drive the next phase of China’s development.

For emerging markets, investors can look to Indian equities for premium economic and, more importantly, earnings growth to drive returns.

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Michaël Lok Michaël Lok
Co-CEO Asset Management & Group CIO
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Patrice Gautry Patrice Gautry
Chief Economist
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Norman Villamin Norman Villamin
Group Chief Strategist
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