The Year of the Trojan Fire Horse: China’s imbalanced economy and unrelenting mercantilism

The Year of the Trojan Fire Horse

While there’s plenty of evidence to support Stephen Roach’s thesis of unsustainable imbalances in China’s economy, China is living up to anthropomorphic characteristics of this year’s zodiac, the Fire Horse, in at least one regard: bold moves, self-reliance, speed, action and innovation in the energy transition. But like the Trojan Horse in the Odyssey, the gift of inexpensive Chinese exports is not always as beneficial as they seem; many come with supply chain dependencies and deindustrialization risks for countries receiving them. For equity investors, after yet another period of Chinese equity underperformance, there’s limited evidence of positive returns on an economy so reliant on unrelenting mercantilism.

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