It has been well documented, in this publication as well as by my colleagues here, that China’s current actions against the Uighur population in Xinjiang constitute some of the worst human rights abuses since the Holocaust in WW2.
Deliberately or otherwise, Donald Trump and his administration have altered the course of the popular narrative on China. Many are much more sceptical and fearful now than they were before.
Talk of Thucydides traps and third world wars abound, and coverage of the brutal repression of the Uighurs is finally starting to gain some mainstream coverage and criticism.
People are right to criticise the Chinese Communist Party (CCP), and its underhand, seditious, ambitious machinations.
However, some important facts remain, which mustn’t be forgotten.
China has pulled more people out of poverty and extreme poverty in the last 50 years than any other nation, in any period of history.
It had plenty of advantages, and determination, and much of it will have been rough around the edges, but it has achieved a huge amount.
Over the weekend, the CCP went as far as claiming that it had reduced extreme poverty to zero.
According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty, measured by the percentage of people living on the equivalent of US$1.90 or less per day.
China’s poverty rate fell from 88% in 1981 to 0.7% in 2015.
While it’s not that pleasant offering any defence of China right now, given what it is up to, we mustn’t forget what an incredible achievement that has been.
While not evenly distributed, China’s income per capita rose 25-fold from $200 to $5,000 per day between 1990 and 2010, and it’s more than doubled again since then.
From an investment perspective, almost a billion people have joined the ranks of global consumers, and are getting wealthier by the year.
China also has the virus under control to an amazing extent even if you don’t believe every piece of official data. Its economy seems to have recovered better than most, due to its control of the virus primarily.
So there are some major reasons to think about investing in China, and from Ray Dalio to Jim Rogers, plenty of the world’s best are doing just that.
But if, like me, the ongoing behaviour of the state in Xinjiang makes any such investment unpalatable, we must look elsewhere.
Another country on a similar trajectory is India.
It lifted 271 million people out of poverty in a decade, from 2006 to 2016 (there are 370 million left though).
Here is its per capita income (inflation adjusted), next to China’s. It’s on a logarithmic scale, so the numbers up the left grow exponentially, making the rapid rise in both lines even more remarkable than they seem at first glance:
You can see the impact of Mao’s leadership in China in the crushing dip in 1960 there, in case you needed any reminding of why there was so much poverty to alleviate in China to begin with.
Demographics are a huge source of growth though, and if you combine the high birth rate in India with improving healthcare, and growing economic output per capita, then there is a potent mix for India’s Nifty 50 index to do rather well.
Companies like Mondelez or McDonald’s are well established players in India, selling the Western consumer brands we all know and love alongside some more localised regulars.
Looking at the energy sector, renewable energy in India has seen some explosive growth in recent years.
Heavily coal dependent, the tides have shifted dramatically in the last couple of years with Narendra Modi’s administration now pushing aggressively for clean energy targets.
Coal will not be the power source which meets the growing energy demands of a wealthier India. Just as Nike wants to sell trainers, companies are circling for the ability to sell energy in India.
Domestic companies are generating the most buzz though, with solar dominating proceedings.
So, if you’re looking at themes like demographics, a growing middle class, and the entrants of new consumers for certain products, but have concerns about China on moral grounds, perhaps India offers a more palatable route. And looking beyond the traditional consumer durables route, perhaps energy (in all its forms) could be a good lens through which to look at emerging markets like India.
Perhaps we could even see another Nifty 50 bubble…
All the best,
Editor, UK Uncensored
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