{"id":29970,"date":"2020-09-28T20:19:37","date_gmt":"2020-09-29T00:19:37","guid":{"rendered":"https:\/\/test.greenmoney.com\/2025\/?p=29970"},"modified":"2022-02-27T23:42:17","modified_gmt":"2022-02-28T04:42:17","slug":"responsible-investing-in-china","status":"publish","type":"post","link":"https:\/\/test.greenmoney.com\/2025\/responsible-investing-in-china\/","title":{"rendered":"Responsible Investing in China"},"content":{"rendered":"
>> Back to January 2022 Issue<\/a><\/div>\n
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(Originally published October 2020)<\/em><\/h5>\n<\/div>\n

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It is undeniable that China\u2019s influence on the global economy, global financial markets and geopolitical system is significant. From an economic standpoint it is the second-largest economy in terms of GDP and is slated to reach parity with the US in the next 10 years or so. In global financial markets, China represents 43% of the MSCI Emerging Markets Index and 5% of the MSCI All Country World Index as of August 31, which follows the United States and Japan. Moreover, 22% percent of the MSCI All Country World Index is non-Chinese companies dependent on the purchasing power of Chinese consumers to fuel their own companies\u2019 sales and profit growth. On the geopolitical front, China continues to be an export machine supported by the country\u2019s low-cost, skilled labor and efficient infrastructure.<\/p>\n

However, the decision whether to invest in China is a complicated one, particularly to a responsible investor. The power and reach of China\u2019s state-led model, its weak human rights record, lack of transparency, as well as heightened geopolitical tensions, can dissuade international investors from investing in Chinese companies or non-Chinese companies doing substantial business in China. Calvert\u2019s viewpoint, however, is that it is preferable for a responsible investor to invest in China and engage as a shareowner, rather than divest. At Calvert, we believe as responsible investors we should fully understand the unique risks that investing in China may offer and weigh that against the return potential that a country with diverse people and a rich culture can offer in the form of both investment opportunities, in areas such as renewables, infrastructure, technology and consumer goods, as well as shareholder engagement. Engagement can create opportunity to be a part of positive change that advocates for business practices that can benefit the planet and the quality of life for billions of people.<\/p>\n

Like many emerging-market economies, China is very much in development. While China\u2019s GDP is second only to the US, its GDP per capita, according to 2019 World Bank data, is far lower, at $10,800 versus the US, at $65,118. This trails most Western countries and is more comparable to its emerging-market peers such as Mexico and Turkey. A strong civil society and legal system that provide effective checks and balances continue to be works in progress. At Calvert, we consider risks around data security, data access, legal protection, systemic corruption and political hazard to be key risks when investing in China, and ones we believe will grow in importance with China\u2019s increasing economic influence.<\/p>\n