After a great start to the year Chinese equities have sold off since mid-February. We think the long-term outlook for China remains very attractive. We expect real GDP growth of 4.4% on average over the next decade. That means real GDP and incomes should be about 50% larger in ten years’ time than they are today. To put that in perspective, by the end of 2030, the expected increase in annual Chinese spending power is larger than the current size of the German and UK economies combined. With MSCI China now trading on just over 15x next year’s expected earnings, we think Chinese equities should offer long-term growth at a reasonable price.

China's growth outlook remains positive

MSCI China price index, rebased to 100 at start of 2021