Viewpoints

What China’s Odyssey Towards “Common Prosperity” Means for Portfolios

China’s regulatory crackdown focuses on specific sectors. Market volatility will likely be temporary, and long-run prospects for active investors remain robust.

In February, China declared victory in lifting its entire population out of extreme poverty. Now it’s made distribution of income a priority.

The call for “common prosperity” is not new: Since the 19th National Congress of the Communist Party of China in 2017, the government has shifted focus from “growth first” to “quality first”, aiming to balance economic growth and sustainable development, with “social fairness” as a key focus. However, progress has been delayed by the U.S.-China trade dispute in 2018-2019, and then by the COVID-19 outbreak.

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The Author

Carol Liao

China Economist

Stephen Chang

Portfolio Manager, Asia

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Disclosures

All investments contain risk and may lose value. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not be construed as an estimate or promise of results that a client portfolio may achieve. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

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