Foreign investments

Is China’s push for self-sufficiency hurting or hurting foreign investment?

VSHina increasingly strives for self-reliance in several areas as President Xi strives to build the country’s internal independence. Foreign investors and businesses are often divided over whether this is a bargain for operations or a downside with long-term consequences.

Two reports have been released that highlight the wide perspective gap between foreign entities doing business with or within China, reports The New York Times.

The European Union Chamber of Commerce in China believes that subsidizing China’s manufacturing of industries such as commercial aircraft, semiconductors, electric cars and other areas could ultimately deter foreign investment. They also argued that China was spending a lot of capital just to develop products that could be bought elsewhere for less.

On the other hand, the American Chamber of Commerce in Shanghai surveyed its members and found that a third of them believed that working towards China’s self-sufficiency would bring profits and income. In addition, hardly any member believed it would cost American investments dearly.

US companies that do business in China currently have no plans to go back, believing that China’s approach allows them to do more business with Chinese customers.

“It gives them a short-term view that doesn’t serve them well when looking at a market like China,” said Ker Gibbs, chairman of the US Chamber of Commerce in Shanghai. “They are right to focus on growth and market opportunities, but China’s pressure for self-sufficiency could limit opportunities in the long run.”

Investing in China’s Growth Potential with KBA

China’s basic economy shows growing potential for growth as more businesses develop within the country as China becomes more self-sufficient. KBA is investing in mainland Chinese fundamentals, which KraneShares says continues to be strong.

For investors seeking access to the Chinese A-share market, the KraneShares Bosera MSCI China A Share ETF (KBA) invests in Chinese A shares, in particular the MSCI China A Share index.

The ETF captures the mid and large cap representation of Chinese stocks listed on the Shenzhen and Shanghai stock exchanges, which have historically been closed to US investors. With $ 760 million in assets under management, KBA remains the largest MSCI-linked Chinese A-share ETF available in the United States

KBA offers exposure to various sectors, with 19.38% invested in finance, 15.21% in industrials, 14.94% in consumer staples, 14.14% in information technology and 11 , 09% in materials at the end of August.

Holdings in KBA include Kweichow Moutai, a major alcohol producer in China, at 4.80%; Contemporary Amperex Technology, a Chinese 2.68% battery maker; and China Merchants Bank, the first commercial bank shareholder wholly owned by corporate legal groups in China at 2.46%.

KBA has an expense ratio of 0.59% and has $ 760 million in assets.

For more news, information and strategy, visit the website China News Channel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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