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 U.S. 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.
From Bicycles to High-Tech Superpower: China’s Remarkable Rise
In just over 30 years, China has transitioned from a mostly agrarian economy to a global leader in technology, infrastructure, and consumer power. As a result by 2030, China’s GDP is projected to surpass the United States, making it the world’s largest economy.
The biggest middle class in the world
China’s middle class is expected to exceed 600 million people by the end of 2025, driving unprecedented consumption growth, making the chinese middle class the biggest in the world.
From Paper Tiger to Powerhouse: Why China Can’t Be Ignored
Critics have versed their doubts about China for years. It mostly stems from a critique around debt levels, demographic challenges, export dependency, lack of freedom and political control. But since China operates under a unique system of state capitalism the nation has been able to balance long term central planning with market dynamics.
The Urbanization Megatrend
A massive transformation, often overlooked by critics, is the urbanization of China. By 2030, over 900 million chinese will live in urban areas, creating a colossal consumer base. This not only boosts productivity but also transforms the country into a consumption-driven economy, that will be much less reliant on exports.
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, aiming 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 investment opportunities, particularly in construction, energy, logistics, technology and other sectors surrounding it, as well as the new markets springing from it.
China controls the rare earth market
Another important part in China’s rise is its dominance in the rare earth market, which has positioned it as a critical player in the global economy. Astonishingly, China controls around 90% of the world’s rare earth refining capacity. This creates significant control over global supply chains, since rare earth minerals are essential components in advanced technologies like military weaponry and defense systems like guided missiles and radar equipment.
Rare earth dominance creates opportunities
This dominance means that China has the power to influence countries worldwide, since these materials are irreplaceable for defense, technology and other important industries. For instance, during trade tensions, China has hinted at limiting exports of rare earth minerals, a move that could cripple industries in other superpowers, as the U.S. and Europe. China’s grip on the rare earth market remains strong, but that also creates opportunities for investors that are willing to follow the money.
As the Dragon Awakens it is hoarding gold and silver
A rather interesting effect of China’s rise is its increased demand for natural resources and above all precious metals like gold and silver. Between 2000 and 2024 China’s official gold reserves increased from roughly 400 tons to around 2100 tons, which is a net increase of 1700 tons and a percentage increase of over 500%. Additionally China is accumulating large amounts of silver for the first time in decades. This will further limit the supply of silver, which is already in one of the biggest supply deficits in History, which you can read more about here.
Diversifying away from the U.S Dollar
The stockpiling of precious metals from the Chinese central bank is allegedly a way to strengthen the chinese financial system and reduce its reliance on the U.S. dollar, especially as it pushes for a more diversified global monetary system in the future. But it also creates opportunities for outside investors in the precious metals market.
Why invest in China?
High-Profile Endorsements: David Tepper is buying everything China
The famous investor David Tepper, founder of Appaloosa Management, went out this fall 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. This is the biggest stimulus in China since the global financial crisis of 2008.
Tepper has done it before
Interestingly, Tepper said the same thing about the American market in 2010 when the Federal reserve bank announced its biggest stimulus package yet ever. As a result of the investments he made then, on the back of the stimulus packages in the 2008-2010 period, he made huge profits in the following years. This contributed to his impressive track record.
Jim Rogers – A bull in China
Jim Rogers, a famous investor and co-founder of the Quantum Fund, along with George Soros, has been an outspoken bull and advocate of investing in China for decades. In his classic book A Bull in China, Rogers explores China’s transition from a closed economy to one of the most dynamic markets globally. The book also offers practical investment ideas across sectors such as agriculture, transportation, and consumer goods.
He notes the government’s ability to implement long-term strategies without the constraints of short election cycles as a key advantage. Moreover, he refutes fears of China being a “paper tiger” by pointing to immense foreign reserves, infrastructure development, and a focus on education and technology.
Howard Marks: Perspective on China’s Growth
Renowned investor Howard Marks has consistently emphasized the importance of context when analyzing China’s growth rates. Moreover he points out that while some might view China’s recent annual growth rate of 5% as a slowdown compared to its earlier double-digit expansion, it’s still remarkable on a global scale.
How to Invest in China?
1. Farming: Feeding China
China’s growing middle class is driving massive demand for high-quality food. Meat consumption, in particular, is skyrocketing, creating opportunities in agriculture and feed production, for example soybeans and corn. China is investing heavily in agri-tech to increase domestic food production, creating opportunities for companies specializing in precision farming and biotechnology.
Global giants like Deere & Company (John Deere) and Bayer AG could benefit through their production of precision equipment and biotechnology. Archer Daniels Midland (ADM) and Bunge Limited could stand to gain through their livestock feed crops like soybeans and corn. Small-cap innovators are Origin Agritech Limited (NASDAQ: SEED), with their hybrid seed technology, and China Green Agriculture (NYSE: CGA), which produce advanced fertilizers.
2. Oil: Energy Demands of a Growing Giant
China remains the world’s largest importer of oil, and its energy demands are set to grow as urbanization and industrialization continue. And while renewable energy is a major focus, China’s current reliance on fossil fuels ensures that oil will remain a critical commodity in the short to medium term.
Global majors like ExxonMobil (XOM) and BP could benefit from China’s steady demand, while domestic giants such as PetroChina and Sinopec dominate refining and distribution within the country. Infrastructure projects like the Belt and Road Initiative requires extensive energy and logistics support. Small-cap energy firms involved in oilfield services and transport, such as Anton Oilfield Services and Hilong Holding, could be well-positioned.
A lot of oil will be needed to fuel China’s rise.
3. Lithium: The Power Behind China’s Electric Revolution
China leads the world in the production and adoption of electric vehicles. This makes lithium—a critical component of EV batteries—an essential investment opportunity. Additionally the government’s push for clean energy and EV adoption will intensify demand for lithium in the coming years. High-Risk, High-Reward Options could be to invest directly in lithium mining companies like Albemarle Corporation (ALB) or Chinese lithium producers. Here is an article going into depth on which Lithium companies that might be multibaggers in the coming years as demand surges. According to a Morningstar article demand will explode from 800 000 metric tonnes to 2,5 million metric tonnes in the year 2030.
4. Renewable Energy: Powering the Future
China is the undisputed leader in renewable energy production, with the government heavily investing in solar, wind, and hydropower projects. This leadership positions renewables as a significant investment opportunity. The country’s ambitious targets to achieve carbon neutrality by 2060 will drive unprecedented growth in the sector. Low-Risk Options could include ETFs like the KraneShares Electric Vehicles & Future Mobility ETF (KARS). For those seeking High-Risk, High-Reward Options, smaller Chinese renewable energy companies like JinkoSolar (JKS) or wind turbine manufacturers offer the potential for exponential returns as global and domestic demand for clean energy solutions continues to surge.
5. China’s Infrastructure Boom: Building the Future
China’s infrastructure boom, fueled by domestic growth and the ambitious One Belt One Road (OBOR) initiative, presents a wealth of investment opportunities. The government’s push to create new trade routes and transform urban centers like Shanghai highlights the long-term potential for economic expansion. High-Risk, High-Reward Options could include investing in small- and mid-cap companies specializing in energy, urban development, and logistics. As an example China Communications Construction Company or China Railway Group. For more stable exposure, Low-Risk Options might involve ETFs focused on infrastructure and industrials, giving investors a chance to ride the wave of China’s infrastructure-driven growth for years to come.
6. Investing in rare earths
For investors, China’s grip on the rare earth market means opportunities in Chinese companies involved in rare earth mining and refining, as well as in Western companies trying to establish alternative sources to break China’s monopoly. Alternatives in the west are Lynas Rare Earths (LYC) and MP Materials (MP). Other mining companies, focused on other resources, can also have hidden values of rare earths inside their mines where they mine their main resource. Rare earth minerals not yet discovered can be sitting beneath the main resource. However, the geopolitical tensions surrounding these minerals also introduce significant risk factors.
7. Investing in gold and silver
All the major powers have been printing money like crazy in the last decades, which makes gold and silver solid investments and safe havens. Additionally China’s increased investments in precious metals makes them even more interesting since it increases the supply deficits even further. According to a report from the World Gold Council, China’s demand for gold and silver remains robust which will keep the demand high going into the future. (World Gold Council, 2024).
Other investments
- 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, aligning with China’s push for renewable energy and green infrastructure under the One Belt One Road initiative.
- China Railway Signal & Communication Corp is a mid-cap company focusing on rail signal technology, essential for OBOR’s rail networks and China’s high-speed rail expansion. CRSC benefits directly from transports and connectivity and the expansion of railways, 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 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, though options may be more limited in this category.
- 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): 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.
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.
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.