VanEck Vectors ChinaAMC SME-ChiNext ETF

China (FXI) (CNXT) has always favored state-owned enterprises despite the strain they put on the country’s private sector and despite the US’s continuous pressure on China to trim its support for SOEs.

After China (FXI) (CNXT) shifted its focus from an export-driven, low-cost manufacturing economy to a consumer-led growth economy, its economic growth was expected to boom.

“Don’t fight the Fed” is an old investing mantra, suggesting that investments should align with the Federal Reserve’s monetary policies instead of against them.

But the exit door needs to appear open as well in order for foreign investors to explore relatively untested pathways to mainland exchanges.

In a new report, we examine the growing opportunities for investors to gain exposure to China’s equity and bond markets, from key policy changes to their inclusion in equity and fixed income benchmarks.

Any slowdown in China’s economic growth is expected to impact developed (SPY) (EWU) (HEDJ) and emerging economies (FXI) (EEM).

Small and medium enterprises (SMEs) remain at the center of the narrative as China transitions from an “old” production-driven model to the “new” consumer and service-led economy.

Since the global financial crisis in 2008, China’s debt concern has increased. China (FXI) (CNXT) landed itself in massive debt to revive its economy.

We continue to believe that when evaluating any investment in either the emerging markets or any global allocation of assets, China needs to be considered.

While China may not be posting the double-digit growth numbers of a decade ago, we believe the country continues to offer interesting investment opportunities.

Investors may also want to consider a small allocation to BB rated emerging markets countries.