Short Briefings on Long Term Thinking - Baillie Gifford Why growth investors can’t ignore China
China is transitioning from a property-led economy to one focused on advanced manufacturing. It already leads the world in electric car production and the batteries that power them. And it’s also a growing force in renewables, robotics and biotech. Investment manager Helen Xiong discusses some of the growth companies involved, why concerns about overcapacity seem overstated and why rising trade barriers have implications for stocks traded inside and outside China.
Background:
Helen Xiong is an investment manager in Baillie Gifford’s Global Alpha Team and recently became joint deputy manager of The Monks Investment Trust. In this episode of Short Briefings on Long Term Thinking she discusses why global growth investors can’t ignore China even if they don’t directly own stakes in any of its companies.
She describes how the country has made ‘advanced manufacturing’ a strategic priority, laying the foundations for future growth. This has already yielded results, with companies such as the electric vehicle maker Li Auto and battery producer CATL creating long-term value for shareholders – with the prospect of more to come.
Xiong suggests that ‘rising trade barriers’ are one consequence of Western nations’ seeking to protect domestic industries and discusses how she takes this into account when deciding which companies to back. In addition, she considers the implications of Chinese retaliation and what that might mean for some of the US and Europe’s leading exporters.
Xiong also shares her view on recent stimulus by the Chinese central bank and government agencies, focusing on signals of a shift that could create long-term shareholder value.
Resources:
China: finding the new shoots of growth
Jonathan Haidt: The Righteous Mind – Why Good People are Divided by Politics and Religion
More from Helen Xiong:
Beyond NVIDIA: investing across the semiconductor ecosystem
Global Alpha Investor Forum 2024
Companies mentioned include:
Timecodes:
00:00 Introduction
1:30 The advantage of being Chinese, African and European
3:00 Relationships v individualism
5:15 China’s post-Covid economy
7:00 Why China matters to global investors
8:30 Overcapacity: a feature, not a bug
10:15 Brutal competition
10:55 Investing in Li Auto
13:45 Li Xiang’s attention to detail
14:30 The car industry’s iPhone moment
16:25 Trade tariffs
18:20 Potential Chinese retaliation
19:35 Chinese regulators
20:35 Stimulus
21:35 Focusing on long-term shareholder value
22:20 Book choice
23:45 Conclusion