China Still Offers Alternative Opportunities

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    Investors still have cold feet when it comes to alternative investments in Asia with concerns that China might have lost control of its economy. However, investors should reconsider because there is a lot of inaccurate information out there, says Chi Lo, senior economist, Greater China, at BNP Paribas Investment Partners. Speaking at its conference, ‘Alternative Investment Opportunities in Asia,’ he said that traditional macroeconomic indicators ‒ such as industrial output, electricity consumption, freight volume, and steel and cement output ‒ have slowed or outright contracted. However, indicators in the new economy, which is represented by the service-based tertiary sector, have grown larger than the old economy. “This suggests creative destruction in process where the new growth indicators, such as movie box office revenues, internet usage, online sales, and insurance premiums, show robust growth.” The traditional macroeconomic indicators fail to capture such structural changes. Although the new economy is not quite strong enough to offset the contraction in the old economy and China’s progress on economic restructuring has run into some setbacks, this does not mean crises. “The fundamentals of the region are quite strong and I don’t think they’ll have another crisis in the next few years.” Ultimately, the China economy is volatile, but there is a lot of opportunity that can be exploited.