Leveraging on “Made in China 2025”

Highlights:

• Since its access to the WTO in 2001, China has seen a stellar rise of its economy. However, “old” comparative advantages have lost vigor, so that China risks to get stuck in the middle-income trap.
• Against this backdrop, Beijing subscribed to a long-term development strategy, called “Made in China 2025”, which is a ten-year, comprehensive, government-led blueprint to transform the country into an advanced manufacturing leader.
• While China considers the plan to be its ticket into a high income country, the Western advanced economies have responded largely negatively. The Trump administration has positioned for a long-term strategic battle. In our view this might delay but not derail China’s resolve to move up the value chain.
• For leveraging on China 2025 we see a long-term investment case of overweighting equities of selected strategically developing sectors within the MSCI China index.

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