Over the first eight months of the year, Chinese exports to Latin America and its Asian neighbours have risen by more than 10%. They also increased significantly towards India (4.2%).
Despite trade tensions, Chinese shipments to the US also increased (+2.8%). On the other hand, exports to the European Union remained virtually stable (+0.7%) due to the weak economic dynamism of the old continent.
More than ever, China’s economic activity is based on international demand as domestic consumption remains low. Imports remain sluggish, rising by only 2.5% since 1 January. Weak domestic demand also translates into meagre inflation, at just 0.6% in August. While most countries faced price slippage, China has not seen inflation above 1% since January 2023. It has even been negative five times in the last 14 months.
While the Chinese economy will take time to overcome its current difficulties, there is still some exciting potential. From a long-term perspective, buy 10% of Chinese shares as part of a neutral or dynamic portfolio. In a defensive portfolio, opt for 5% of Chinese shares and 5% of bonds in yuan.
