Unsubscribe

Confirm you would like to unsubscribe from this list

You have unsaved changes on the page. Would you like to save them?

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions

For Institutional / Wholesale / Professional Clients

The content on this website is intended for institutional and professional investors in the United States only and is not suitable for individual investors or non-U.S. entities. Institutional and professional investors include pension funds, investment companies registered under the Investment Company Act of 1940, financial intermediaries, consultants, endowments and foundations, and investment advisors registered under the Investment Advisors Act of 1940.

TERMS AND CONDITIONS OF USE

Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.

Disclaimers

Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.

Suitability

No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.

Termination

You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Decline
Give Us a Call

Fund Operations
800.847.0200

FIND ANOTHER CONTACT
Beijing - Mixing The Old and New
Markets

Observations from China

Lei Wang, CFA
Portfolio Manager and Managing Director
26 Jan 2022
19 min listen

After three months in China, PM Lei Wang discusses his observations on Beijing’s regulatory agenda, ESG progress and the opportunities ahead.

Read Transcript

Observations from China

Craig Blessing:  Hi, and welcome to another episode of Away From the Noise, Thornburg Investment Management’s podcast on key investment topics, economics and market developments of the day.  I’m Craig Blessing, client portfolio manager for international equity at Thornburg, and I’ll be your host.  Joining us today is Lei Wang, Rocky, a managing director and portfolio manager for international equity and international equity ESG strategies.  In line with the theme of our podcast, Rocky has just returned from 3 months in Shanghai, away from the noise of the US markets but right in the middle of what has been a very eventful year in Chinese markets.  In 2020, China was one of only a handful of major countries to register positive growth, and it’s market was one of the best performing in the world, with the MSCI China index returning about 30 percent versus a return of 11 percent for the MSCI All Country World Index ex-US.  In 2021, however, Chinese growth slowed and so did its financial markets, with China down about 12 percent versus a gain of 10 percent for the index.   One of the drivers of that underperformance has been a number of regulatory measures taken by the government in various sectors of the economy impacting a number of companies which were previously market leaders and leaving many in the west to wonder if the government was attacking the private sector making I s China investible one of the most asked questions in global financial markets.  Rocky is very well positioned to help us answer that question and a number of others that investors have been asking.  A native of Shanghai, after graduating university, Rocky worked for the People’s Bank of China, China’s central bank, for several years before moving to the US to get his MBA.  He joined Thornburg in 2004.  Rocky, let’s take a different approach to the is China investible question.  Based on your experience and the time you spent in China recently, what do you think the Chinese government is trying to accomplish with their regulatory moves?

Rocky Wang: Thank you, Craig, for the intro.  So, you’re right, I spent, 3½ months in Shanghai this time so exactly in the middle of, intensive regulator situation during the period.    You know, I think China is not really unique situation because, what Chinese doing is many other country in the west trying to do, as well, but the Chinese just do it their way, being a little more or less undemocratic way.  So, what I wanna say here is Chinese government, when they launch this regulatory changes, I do not thinking there is a concerted as attack on the private sector, as media here is trying to picture that way.  So actually they just want to target certain behaviors or industrial practices.  I think that work against the state goal like achieving sustainable growth.  Also sociable responsible growth, which I think many countries in the west also trying to deliver as well.  But the difference is the Chinese regulate things in a very intensive, very harsh way, and, particularly  lack of transparency without too much explanation, basically asserting  overnight.  I think that’s  lesson Chinese should learn because the impact on the capital market be tremendous, and they pay unnecessary costs by doing that way.

Craig Blessing:  Based on what you just said, what do you think China does next, and what’s the regulatory agenda going to be going forward?

Rocky Wang: Craig, it’s like old movie.  You know, you and me have been in this industry business long enough.  We saw this old movie again, again.  So whenever policies shift direction too quick, too extreme, they will swing back with a certain type of moderation.  So from here, what I would like to see is two things.  No. 1, there will be more clarity of the policy, particularly on execution perspective such as how would you define consumer data privacy, how to consider safe storage of those data, things like that.  At a certain point of time, capital markets will realize, things actually were not that bad as we thought.  Second, I think the Chinese government likely back peddle on some policies.  I think this could trigger unintended consequence, for example,  consumption growth slowing down dramatically during the summer or early fall.  There was a self-inflicted policy so likely you will see unwinding or back peddling, from here.

Craig Blessing:  China’s economy has slowed noticeably this year.  What do you think is driving that and how is the government responding?

Rocky Wang: Oh, there are bunch of reasons.  I think among them, No. 1, as we said early, harsh regulation are the No. 1 reason, and it’s self-inflicted, so likely we will see some unwinding of those regulations.  Second, I think pandemic control  is not a significant reason for the slowing economy this year.  When I was in China, Shanghai this time, I had to do the vaccine test three, two times every single week, and had to be quarantined  for 1 month, despite the fact I already vaccinated. It’s so inconvenient for consumer to move around, so immobility that, definitely hurt consumption this year.  Third, price crisis because the politician, as we said, introduce terribly mishandle environmental policies, trigger quite severe power shortage among many manufacturers.  I think that’s hurt manufacturing activities during the late summer or early fall.  But on this topic, I think the Chinese not alone because we saw the similar thing happen in certain European countries as well.  So what response to come?  Unwinding some harsh policies with moderation.  More realistic policies to smooth out the green energy transition.  Uh, consumption, jump start consumption is little bit challenging because you can’t point a gun at  people’s head and ask them to consume.  You had to waiting for the property market to stabilize.  You had to waiting for stock market recover.  You had a waiting for the confidence coming back, and then you will see some nice, following of consumption, uh, growth come back again, not necessarily for this year but likely in the first half next year.

Craig Blessing:  After notably underperforming other global markets, do you think there’s value in China yet, and if so, where?  What do you think the new market leadership is going to be going forward, and will they be the old leaders or new ones?

Rocky Wang:     Craig, you know me.  I’m always unwilling to make a market call on specific countries, particularly, you know, what could be GDP next year is.  You know, that’s not a priority here at Thornburg.  Portfolio manager always have pride in terms of buying right stock regardless what is GDP for that country.  However, you know what, I do identifying opportunity from here.  First, I think it’s coming from internet sector.  They are so unloved but, you know, some companies still had very strong fundamental, very solid business model, very high quality fundamental framework, and I think that probably we’ll see some nice re-rating opportunity in that space.  Second opportunity I identify related to I would say green energy along the supply chain.  For example, the solar panel makers or wind farm operator in that country.  I think total address for market or we call TAM, for those, industry is huge and long and there will be multiple years opportunity and here I’m firmly believe China will probably become the leading green energy equipment maker in the world with very competitive pricing and skill.

Craig: Speaking of ESG, the environment has been all over the news lately and ESG has been a very popular investment theme this year as we all know. China isn’t a country that many people thing of when they’re looking for ESG investments. Rocky, how ESG is China?

Rocky: That’s very, very interesting topic.  Is quite a fresh learning for me for during this trip, so this time really give me firsthand observation on the ground.  The air quality in Shanghai is way better than many years ago.  Watching the EV car penetration on the street is way higher than ever. You know, I take taxis, but I would say more than 50 percent taxi I take is all green energy driven either coming from the hybrid or is purely 100 percent electricity.  Close to 30 percent new car sales figures already coming from EV cars.  That number is around 10 percent for Europe but very low single digits in the US.  So China definitely make a lot of progress in terms of EV car penetration. That’s why I identify China has great opportunity from investor perspective in ESG Before the trip, I admit I’m thinking China just was halfhearted on its carbon emission goal, but after trip I definitely change my mind.  I think Chinese government, all their politician, are actually very serious and very committed to this. It’s not just they realize air pollution have long term, liability cause to the country or to its citizens’ health, welfare, but actually probably realize actually it’s great business.  It’s great, fantastic, huge industry.  I think had tremendous opportunity keep their growth sustainable from here and also give them so-called opportunity to claim they are the leader in this next generation industrialization related to energy transition.  So I would say day by day what we see in this country is investors are increasingly embracing ESG or environmental awareness

Rocky: At Thornburg recognize a lot of great investment opportunity, not just in Europe but particularly in emerging market, such as China, because the reality is that China’s still largest air polluter in the world but they definitely had a very ambitious goal trying to change that.  They going to spend 4 trillion R and B dollars and into anything related to green for next couple of years.  That definitely means a lot of investment opportunity for us as well.  You know, that’s a really fun part of, being, ESG investors.

Craig Blessing:  Many western observers are calling the problems at Evergrande China’s Lehman moment.  We know how important the real estate sector is to China’s economy, and we know how big the problems are, but do you think that statement’s entirely accurate?

Rocky: Craig, I disagree. I was in this profession during financial crisis back to oh wow,  it’s almost 12, 13 years ago, and so I do have the opportunity to really compare what happened in history versus what happening now in China, whether it’s Lehman equivalent moment in China.  My answer is no.  Two reasons.  Demand size.  The demand for property coming from mortgage demand, mortgage application or mortgage qualification is quite harsh for Chinese home buyers.  For example, for the first-time buyer in China, you likely you had to put down like 30 or 40 percent at down payment, and for, yeah, you still allowed to buy second piece of property that down payment requirement it could be as high as 60 to 70 percent, so that means there’s not too much leverage from the demand side on this property sectors.  The second reason I would say is too big to fail.  The Chinese property market so big, it’s, have so much ramification in terms impact on the consumption confidence will hurt the Chinese economy growth.  Let’s go back to the base.  China GDP growth driven by three things.  Exports, fixed asset investment and consumption.  Export is fantastic in China because they are so lucky, because all the global supply chain shut down and Chinese manufacturing capacity, facility, pretty much intact because they did pretty damn good job in terms of pandemic control.  So they taking market shares from other country, from India and from Vietnam.  They increasing market share from 11, 12 percent to 14, 15 percent, but you know what, when things normalize the probably the market share will peak here and even decline little bit.  So the driver coming from export-related GDP growth probably will peak or even decline.  So it really put the burden on this consumption and fixed asset investment.  Consumption is pretty wake into the summer and likely first half next year giving all the reason early we talk about it, so we don’t need to be elaborate again.  So really put the burden on the fixed asset investment two-part, property investment and other fixed investment such like industrial investment, cap-ex.  You know, you spend tons of money, early you mentioned a figure like 4 trillion R and B spending on the green energy transition project in next couple year, but still not big enough to overset the decline in other segment.  So they really need investment property space continue stabilize otherwise this could be called unintended consequence on the GDP growth.  One more things is could be tricky year, political tricky year for both country, I mean China and US.  In the US, you have this midterm, but in China don’t forget the Communist Party have their annual congress meeting for the 20th session next year, and likely they will reelect a president for next 5 years.  Usually, according to historical data, politicians usually like to have GDP print during election year.  So from that perspective you will see most stabilize of China GDP growth rather than kind of unthinkable downturn which is kind of unfavorable for any politician to get re-elected.  So all things together, I do not think it’s Lehman Brother moment for China related property.  I do, actually I had more confidence I think GDP growth or consumption growth will very likely stabilize from early next year, and next year Chinese growth probably is as decent as before.

Craig Blessing:  Thanks, Rocky, and thank you for listening.  You can find us on Thornburg.com/podcasts as well as on Apple podcasts where you can rate, subscribe and review us.  Please join us again soon for the next episode of Away From the Noise and thanks again.

Craig Blessing: Hi, and welcome to another episode of Away From the Noise, Thornburg Investment Management’s podcast on key investment topics, economics and market developments of the day.  I’m Craig Blessing, client portfolio manager for international equity at Thornburg, and I’ll be your host.  Joining us today is Lei Wang, Rocky, a managing director and portfolio manager for international equity and international equity ESG strategies.  In line with the theme of our podcast, Rocky has just returned from 3 months in Shanghai, away from the noise of the US markets but right in the middle of what has been a very eventful year in Chinese markets.  In 2020, China was one of only a handful of major countries to register positive growth, and it’s market was one of the best performing in the world, with the MSCI China index returning about 30 percent versus a return of 11 percent for the MSCI All Country World Index ex-US.  In 2021, however, Chinese growth slowed and so did its financial markets, with China down about 12 percent versus a gain of 10 percent for the index.   One of the drivers of that underperformance has been a number of regulatory measures taken by the government in various sectors of the economy impacting a number of companies which were previously market leaders and leaving many in the west to wonder if the government was attacking the private sector making I s China investible one of the most asked questions in global financial markets.  Rocky is very well positioned to help us answer that question and a number of others that investors have been asking.  A native of Shanghai, after graduating university, Rocky worked for the People’s Bank of China, China’s central bank, for several years before moving to the US to get his MBA.  He joined Thornburg in 2004.  Rocky, let’s take a different approach to the is China investible question.  Based on your experience and the time you spent in China recently, what do you think the Chinese government is trying to accomplish with their regulatory moves?

Rocky Wang: Thank you, Craig, for the intro.  So, you’re right, I spent, 3½ months in Shanghai this time so exactly in the middle of, intensive regulator situation during the period.    You know, I think China is not really unique situation because, what Chinese doing is many other country in the west trying to do, as well, but the Chinese just do it their way, being a little more or less undemocratic way.  So, what I wanna say here is Chinese government, when they launch this regulatory changes, I do not thinking there is a concerted as attack on the private sector, as media here is trying to picture that way.  So actually they just want to target certain behaviors or industrial practices.  I think that work against the state goal like achieving sustainable growth.  Also sociable responsible growth, which I think many countries in the west also trying to deliver as well.  But the difference is the Chinese regulate things in a very intensive, very harsh way, and, particularly  lack of transparency without too much explanation, basically asserting  overnight.  I think that’s  lesson Chinese should learn because the impact on the capital market be tremendous, and they pay unnecessary costs by doing that way.

Craig Blessing: Based on what you just said, what do you think China does next, and what’s the regulatory agenda going to be going forward?

Rocky Wang: Craig, it’s like old movie.  You know, you and me have been in this industry business long enough.  We saw this old movie again, again.  So whenever policies shift direction too quick, too extreme, they will swing back with a certain type of moderation.  So from here, what I would like to see is two things.  No. 1, there will be more clarity of the policy, particularly on execution perspective such as how would you define consumer data privacy, how to consider safe storage of those data, things like that.  At a certain point of time, capital markets will realize, things actually were not that bad as we thought.  Second, I think the Chinese government likely back peddle on some policies.  I think this could trigger unintended consequence, for example,  consumption growth slowing down dramatically during the summer or early fall.  There was a self-inflicted policy so likely you will see unwinding or back peddling, from here.

Craig Blessing: China’s economy has slowed noticeably this year.  What do you think is driving that and how is the government responding?

Rocky Wang: Oh, there are bunch of reasons.  I think among them, No. 1, as we said early, harsh regulation are the No. 1 reason, and it’s self-inflicted, so likely we will see some unwinding of those regulations.  Second, I think pandemic control  is not a significant reason for the slowing economy this year.  When I was in China, Shanghai this time, I had to do the vaccine test three, two times every single week, and had to be quarantined  for 1 month, despite the fact I already vaccinated. It’s so inconvenient for consumer to move around, so immobility that, definitely hurt consumption this year.  Third, price crisis because the politician, as we said, introduce terribly mishandle environmental policies, trigger quite severe power shortage among many manufacturers.  I think that’s hurt manufacturing activities during the late summer or early fall.  But on this topic, I think the Chinese not alone because we saw the similar thing happen in certain European countries as well.  So what response to come?  Unwinding some harsh policies with moderation.  More realistic policies to smooth out the green energy transition.  Uh, consumption, jump start consumption is little bit challenging because you can’t point a gun at  people’s head and ask them to consume.  You had to waiting for the property market to stabilize.  You had to waiting for stock market recover.  You had a waiting for the confidence coming back, and then you will see some nice, following of consumption, uh, growth come back again, not necessarily for this year but likely in the first half next year.

Craig Blessing: After notably underperforming other global markets, do you think there’s value in China yet, and if so, where?  What do you think the new market leadership is going to be going forward, and will they be the old leaders or new ones?

Rocky Wang: Craig, you know me.  I’m always unwilling to make a market call on specific countries, particularly, you know, what could be GDP next year is.  You know, that’s not a priority here at Thornburg.  Portfolio manager always have pride in terms of buying right stock regardless what is GDP for that country.  However, you know what, I do identifying opportunity from here.  First, I think it’s coming from internet sector.  They are so unloved but, you know, some companies still had very strong fundamental, very solid business model, very high quality fundamental framework, and I think that probably we’ll see some nice re-rating opportunity in that space.  Second opportunity I identify related to I would say green energy along the supply chain.  For example, the solar panel makers or wind farm operator in that country.  I think total address for market or we call TAM, for those, industry is huge and long and there will be multiple years opportunity and here I’m firmly believe China will probably become the leading green energy equipment maker in the world with very competitive pricing and skill.

Craig: Speaking of ESG, the environment has been all over the news lately and ESG has been a very popular investment theme this year as we all know. China isn’t a country that many people thing of when they’re looking for ESG investments. Rocky, how ESG is China?

Rocky: That’s very, very interesting topic.  Is quite a fresh learning for me for during this trip, so this time really give me firsthand observation on the ground.  The air quality in Shanghai is way better than many years ago.  Watching the EV car penetration on the street is way higher than ever. You know, I take taxis, but I would say more than 50 percent taxi I take is all green energy driven either coming from the hybrid or is purely 100 percent electricity.  Close to 30 percent new car sales figures already coming from EV cars.  That number is around 10 percent for Europe but very low single digits in the US.  So China definitely make a lot of progress in terms of EV car penetration. That’s why I identify China has great opportunity from investor perspective in ESG Before the trip, I admit I’m thinking China just was halfhearted on its carbon emission goal, but after trip I definitely change my mind.  I think Chinese government, all their politician, are actually very serious and very committed to this. It’s not just they realize air pollution have long term, liability cause to the country or to its citizens’ health, welfare, but actually probably realize actually it’s great business.  It’s great, fantastic, huge industry.  I think had tremendous opportunity keep their growth sustainable from here and also give them so-called opportunity to claim they are the leader in this next generation industrialization related to energy transition.  So I would say day by day what we see in this country is investors are increasingly embracing ESG or environmental awareness

Rocky: At Thornburg recognize a lot of great investment opportunity, not just in Europe but particularly in emerging market, such as China, because the reality is that China’s still largest air polluter in the world but they definitely had a very ambitious goal trying to change that.  They going to spend 4 trillion R and B dollars and into anything related to green for next couple of years.  That definitely means a lot of investment opportunity for us as well.  You know, that’s a really fun part of, being, ESG investors.

Craig Blessing: Many western observers are calling the problems at Evergrande China’s Lehman moment.  We know how important the real estate sector is to China’s economy, and we know how big the problems are, but do you think that statement’s entirely accurate?

Rocky: Craig, I disagree. I was in this profession during financial crisis back to oh wow,  it’s almost 12, 13 years ago, and so I do have the opportunity to really compare what happened in history versus what happening now in China, whether it’s Lehman equivalent moment in China.  My answer is no.  Two reasons.  Demand size.  The demand for property coming from mortgage demand, mortgage application or mortgage qualification is quite harsh for Chinese home buyers.  For example, for the first-time buyer in China, you likely you had to put down like 30 or 40 percent at down payment, and for, yeah, you still allowed to buy second piece of property that down payment requirement it could be as high as 60 to 70 percent, so that means there’s not too much leverage from the demand side on this property sectors.  The second reason I would say is too big to fail.  The Chinese property market so big, it’s, have so much ramification in terms impact on the consumption confidence will hurt the Chinese economy growth.  Let’s go back to the base.  China GDP growth driven by three things.  Exports, fixed asset investment and consumption.  Export is fantastic in China because they are so lucky, because all the global supply chain shut down and Chinese manufacturing capacity, facility, pretty much intact because they did pretty damn good job in terms of pandemic control.  So they taking market shares from other country, from India and from Vietnam.  They increasing market share from 11, 12 percent to 14, 15 percent, but you know what, when things normalize the probably the market share will peak here and even decline little bit.  So the driver coming from export-related GDP growth probably will peak or even decline.  So it really put the burden on this consumption and fixed asset investment.  Consumption is pretty wake into the summer and likely first half next year giving all the reason early we talk about it, so we don’t need to be elaborate again.  So really put the burden on the fixed asset investment two-part, property investment and other fixed investment such like industrial investment, cap-ex.  You know, you spend tons of money, early you mentioned a figure like 4 trillion R and B spending on the green energy transition project in next couple year, but still not big enough to overset the decline in other segment.  So they really need investment property space continue stabilize otherwise this could be called unintended consequence on the GDP growth.  One more things is could be tricky year, political tricky year for both country, I mean China and US.  In the US, you have this midterm, but in China don’t forget the Communist Party have their annual congress meeting for the 20th session next year, and likely they will reelect a president for next 5 years.  Usually, according to historical data, politicians usually like to have GDP print during election year.  So from that perspective you will see most stabilize of China GDP growth rather than kind of unthinkable downturn which is kind of unfavorable for any politician to get re-elected.  So all things together, I do not think it’s Lehman Brother moment for China related property.  I do, actually I had more confidence I think GDP growth or consumption growth will very likely stabilize from early next year, and next year Chinese growth probably is as decent as before.

Craig Blessing: Thanks, Rocky, and thank you for listening.  You can find us on Thornburg.com/podcasts as well as on Apple podcasts where you can rate, subscribe and review us.  Please join us again soon for the next episode of Away From the Noise and thanks again.

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.
Subscribe

More Insights

Woman sits at her desk analyzing financial forecasts
Markets & Economy

Market Concentration and the Fed’s Policy Outlook

Explore the recent trends in market concentration and examine the implications of the Federal Reserve's policy decisions for the rest of 2024.
Two men stand in a desert holding a rope pulling against each other
Markets & Economy

Value vs. Growth: Does Another Fed Hike Matter?

Discover why value and income-oriented stocks are set to outperform in today's market dominated by rising interest rates and persistent inflation.
Woman calculates some financial decisions over her desk.
Markets & Economy

The Value of Dividends and Munis to Stoke Income

Explore the impact of high dividend stocks and municipal bonds in a rising rate environment amid increasing government debt and new administrative policies.
A few people using a map and a compass to pinpoint their current location and future destination.
Economy

Navigating Recession, the Fed, Inflation and Borrowing

Examine the current economic complexities while considering consumer demand, corporate resilience, and interest rates to anticipate market risks in 2024.
Young man checks his airline status against his mobile ticket.
Monetary & Fiscal Policy

Recession and Reversion to the Mean

Exploring the economic landscape reveals persistent recession signals and elusive downturns shaping the outlook. Read about the interplay of factors now.
Webcasts image, fixed income portfolios as the fed ponders a pivot.
Fixed Income

How to Position Bond Portfolios as the Fed Ponders a Pivot

The Fed's changing interest rate policy adds uncertainty to the bond market, highlighting the need for resilient portfolios amid inflation and economic changes.

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.