Asia is undergoing a seismic economic shift. One that will echo throughout the century. It is the unfolding of a market revolution, driven by the meteoric rise of China. As the Dragon Awakens, fortunes are being made by those bold enough to seize the opportunity.
A new economic order
China is a nation of over 1.4 billion people. It is a roaring economic force reshaping the global economy. In less than a decade, it’s poised to overtake the United States as the world’s largest economy. From its ambitious Belt and Road Initiative, the modern Silk Road, to its dominance in renewable energy and technology, China is forging a new economic order.
China’s Remarkable Rise
In just the past 30 years, China has shifted from an agrarian economy to a global leader in technology, infrastructure, and consumption. By 2030, it is expected to surpass the United States as the world’s largest economy.
The biggest middle class in the world
By 2026, China’s middle class will have grown to over 600 million people. That will make it the largest in the world. As more people move up, they will buy more food, clothes, and other goods.
The Urbanization Megatrend
The urbanization of China is a gigantic megatrend. By 2030, over 900 million Chinese people are expected to live in cities and many will be a lot wealthier. This reduces China’s reliance on exports since they will have an enormous consumer base within the country.
From Paper Tiger to Powerhouse: Why China Can’t Be Ignored
Critics have had doubts about China for years. They worry about high debt, a shrinking population, too much reliance on exports, lack of freedom, and political control. However, China uses a unique system of state capitalism which lets it mix long-term planning with market forces.
The One belt One road mega-project
The One Belt One Road (OBOR) initiative is one of the most ambitious infrastructure projects in modern history. It aims to connect over 60 countries across Asia, Africa, and Europe through a vast network of roads, railways, ports, and digital infrastructure.
The One Belt One road project creates vast investment opportunities in construction, energy, logistics, technology and other sectors surrounding it. What’s more, new markets will spring from it.
China controls the rare earth market
China controls about 90 percent of the world’s rare earth refining. This gives it big power over global supply chains. Rare earth minerals are crucially important for advanced technologies. For example in military weapons and defense systems, like guided missiles and radars.
Rare earth dominance creates opportunities
During trade tensions, China has threatened to cut back on rare earth exports. This could hurt industries in places like the United States and Europe, and gives China immense negotiating power. However, it also means opportunities for investors.
China is hoarding precious metals
From 2000 to 2024, China’s official gold reserves grew from about 400 tons to 2 100 ton. An increase of 1 700 tons, or more than 500 percent. China is also buying large amounts of silver for the first time in decades. With silver already in a historic supply shortage, this demand will make the silver squeeze even worse.
Diversifying away from the U.S Dollar
China’s precious metal purchases strengthens its financial system and reduces reliance on the U.S. dollar. Both China and Russia aim for a more diversified global monetary system.
Why invest in China?
High-Profile Endorsements: David Tepper is buying “everything” China
The famous investor David Tepper, founder of Appaloosa Management, went out publicly and said that he wanted to “buy everything” China and that Chinese stocks are back. Tepper’s enthusiasm stems from China’s recent stimulus package, an enormous injection of over 142 billions, going into top state owned banks. The biggest stimulus in China since the global financial crisis of 2008.
Tepper is old in the game
Interestingly, Tepper made a similar observation about the U.S. market in 2010, when the Federal Reserve announced what was then the largest stimulus package ever. Tepper made a lot of money off this stimulus by making major investments.
Jim Rogers – A bull in China
The well-known investor Jim Rogers, who started the Quantum Fund along with George Soros, has believed in China’s growth for years. In his book A Bull in China, he offers simple ideas for making money from China’s rise.
Rogers points out Chinas large savings, new roads and buildings, foreign reserves and a focus on technology and education. Furthermore, he says, China can plan long into the future because it does not have short election cycles.
Howard Marks: Perspective on China’s Growth
Renowned investor Howard Marks emphasizes the importance of context when analyzing China’s growth. Some might see the current five percentages of annual growth as a slowdown from the earlier double-digit returns. However, China’s growth still exceeds most developed nations. In the U.S. and Europe, growth is only around 1 to 2 percent per year.
How to Invest in China’s rise?
1. Farming: Feeding China
China’s growing middle class is increasing demand for high-quality food. Meat consumption, in particular. This creates opportunities in agriculture, especially in soybeans and corn. China is investing heavily in technology to boost domestic food production which benefits companies working in precision farming and biotechnology.
Companies such as Deere & Company (John Deere) and Bayer AG may profit from their precision equipment and biotechnology products. Archer Daniels Midland (ADM) and Bunge Limited could gain from livestock feed crops like soybeans and corn. Small-cap innovators include Origin Agritech Limited (SEED), which develops hybrid seeds, and China Green Agriculture (CGA), a producer of advanced fertilizers.
2. Oil: Energy Demands of a Growing Giant
China is the world’s largest importer of oil. Its demand will keep rising as cities and industries expand. Renewables are a priority, but the country’s reliance on fossil fuel will remain high long into the future.
Global majors like ExxonMobil and BP could benefit from this demand. In China, PetroChina and Sinopec dominate refining and distribution. Large projects such as the Belt and Road Initiative also require massive amounts of energy. Smaller players in oilfield services and transport, include Anton Oilfield Services and Hilong Holding.
A lot of oil will be needed to fuel China’s rise.
3. Lithium: The Power Behind China’s Electric Revolution
China is the global leader of the world in producing and using electric vehicles. Lithium, a key component in EV batteries, is in high demand. The government’s push for clean energy will increase lithium demand even more. Investors may consider high-risk, high-reward opportunities by buying shares in lithium mining companies like Albemarle Corporation (ALB) or Chinese producers. Morningstar reported that global demand will explode from 800,000 metric tons to 2.5 million metric tons by 2030.
4. Renewable Energy: Powering the Future
China is the world leader in renewable energy production. The government is investing heavily in solar, wind, and hydropower. The country also aims to reach carbon neutrality by 2060, which will drive strong growth in the sector.
Lower risk options could include ETFs such as the KraneShares Electric Vehicles & Future Mobility ETF (KARS). Investors seeking higher risk and reward could look at smaller Chinese renewable energy companies like JinkoSolar (JKS) or wind turbine producers.
5. China’s Infrastructure Boom: Building the Future
China’s infrastructure boom, driven by domestic growth and the One Belt One Road (OBOR) initiative, offers opportunities. High-risk, high-reward options include small- and mid-cap companies in energy and infrastructure development. Examples are China Communications Construction Company and China Railway Group. For more stable exposure, investors might consider ETFs focused on infrastructure, urban development and industrials.
6. Investing in rare earths
China ‘s dominance in the rare earth market, creates opportunities for investors in local mining and refining companies. Western companies are also seeking alternative sources to reduce reliance on China. Examples are Lynas Rare Earths (LYC) and MP Materials (MP). Some mining companies may have undiscovered rare earth minerals beneath their main resources. However, geopolitical tensions adds significant risks to this market.
7. Investing in gold and silver
In the past few decades, major powers have printed large amounts of money. Consequently, this has reduced the supply of gold and silver. According to the World Gold Council in 2024, China’s demand for these metals remains strong. And as a result, the supply shortage is likely to worsen. This could make gold and silver attractive safe-haven investments.
Conclusion
For investors, the opportunities are vast, spanning industries from technology and energy to agriculture and rare earth minerals. The key lies in understanding the unique dynamics of China’s markets and identifying the companies and sectors best positioned to thrive.
Other Investments in China
- Companies like WuXi Biologics and Pop Mart capitalize on urban consumer, infrastructure and healthcare trends in megacities like Shanghai.
- GCL Technology Holdings: A leader in solar-grade polysilicon and wafers, which aligns with China’s push for renewable energy and green infrastructure. Furthered under the One Belt One Road initiative.
- China Railway Signal & Communication Corp is a mid-cap company focusing on rail signal technology. This is essential for OBOR’s rail networks and China’s high-speed rail expansion. CRSC benefits directly from transports and connectivity. The expansion of railways is a cornerstone of OBOR and China’s domestic growth strategy.
- Baidu (BIDU) and Alibaba (BABA) are bigger and less obscure alternatives. They are also part of big investor’s portfolios like that of David Tepper and Michael Burry.
- Many chinese companies are listed in Hong Kong as “Direct investments”. As an example GCL Technology and Pop Mart, offers direct investment opportunities for international investors via brokers in Hong Kong.
- U.S.-Listed Chinese ADRs: American Depositary Receipts (ADRs) can provide exposure to Chinese mid-caps.
- For those who prefer the diversification of a Stock fund, KraneShares MSCI One Belt One Road ETF (OBOR) focuses on companies participating in OBOR projects, including infrastructure, logistics, and materials.
- There are multiple ETFs that cover China. For example, VanEck China Growth Leaders ETF (GLCN). GLCN targets small- and mid-cap growth companies benefiting from China’s domestic and global infrastructure ambitions. IShares China Small-Cap ETF (ECNS) offers exposure to small-cap Chinese companies, including those in urban infrastructure and renewable energy.
Disclosure: I am long Chinese stock funds, chinese ETFs and precious metals
Disclaimer: All information found on this site, ideas, opinions, predictions, commentaries are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. I will not and cannot be held accountable for any actions you take as a result of what you read in here. Use the information at your own risk. I am not your investment advisor. Consult a licensed financial advisor before making any investment decisions.
