"China stands out among the major rising global powers."
In the heart of Europe, Markus Zschaber, managing partner of the V.M.Z. Asset Management Company based in Cologne, advocates for a diversified investment strategy in China despite political risks. This strategy is underpinned by China's steady economic growth and ambitious plans for the future.
China's economy, already a global powerhouse, is continuing to grow steadily. Beijing, with its final say in decisions, has laid the foundation for sustained high growth with its Five-Year Plans and projects like the "New Silk Road" and the Regional Comprehensive Economic Partnership (RCEP) free trade agreement.
The 14th Five-Year Plan, passed by the Chinese People's Congress in March 2021, emphasizes technological development across key sectors. The goal is to enhance China's scientific and technological independence in response to economic conflicts and achieve global leadership by 2035.
The plan focuses on investments in semiconductors, healthcare, quantum computers, and cloud computing. China has made significant strides in domestically developed high-performance chips, with companies like Huawei and Baidu developing advanced AI chips. Domestic firms like Cambricon and Biren Technology are also advancing AI accelerators, though they still trail top global players.
In healthcare, while explicit goals are less detailed, the plan includes strengthening innovation-driven development, which likely encompasses biotechnology and medical technology as part of fostering modern industrial systems with higher added value.
The 14th Five-Year Plan also supports development in quantum technology, with provinces like Anhui noted for progress in quantum computing research and applications. This strategic focus on emerging technologies indicates China's intent to compete globally in high-tech sectors.
China is aggressively expanding cloud computing and AI compute capacity to support digital sovereignty and AI leadership. The "Eastern Data, Western Compute" initiative builds national supercomputing hubs that leverage cheaper western resources. By mid-2024, China achieved an estimated 246 EFLOPS AI computing power, second only to the U.S.
Leading domestic cloud providers like Alibaba Cloud, Tencent Cloud, and Huawei Cloud increasingly rely on homegrown chips and software frameworks to reduce reliance on foreign technologies and secure the AI software stack in the face of geopolitical risks.
The Communist Party aims to transform China into a "moderately prosperous society," with the focus of investments on the sectors outlined in the 14th Five-Year Plan. The strategy aims for China to become a global innovation powerhouse by 2035, underpinned by advancements in intellectual property protection, a modernized IP governance system, and cultivating domestic talent and industries.
The Chinese stock market, in light of these ambitious plans, remains a promising investment opportunity. Among the major emerging markets, it is the most appealing investment destination. Investors should consider the potential returns and risks associated with China's technological advancements and economic growth as they make their investment decisions.
The Chinese stock market, due to the country's ambitious technological advancements and economic growth as outlined in the 14th Five-Year Plan, presents an attractive investment opportunity. This investment strategy is supported by the finance sector, with insurance companies and financial institutions eyeing China as a promising market, particularly due to its increased focus on technology.
The 14th Five-Year Plan's emphasis on technological development, particularly in sectors like semiconductors, healthcare, quantum computers, and cloud computing, aligns well with the ongoing advancements in technology, making China a key player in the global tech scene.
