With seven Chinese provinces set to cut back growth targets for the year, China country-specific exchange traded funds may have a hard time rebounding after a dismal year.
The three largest China ETFs, iShares China Large-Cap ETF (NYSEArca: FXI), iShares MSCI China ETF (NYSEArca: MCHI) and SPDR S&P China ETF (NYSEArca: GXC), underperformed over the last year, with FXI falling 10.4%, MCHI declining 5.1% and GXC staying relatively flat at 0.4%.
Seven Chinese provinces are lowering growth targets for 2014 as the government shifts over to sustainable growth from an export-oriented growth model, Bloomberg reports.
For example, according to the official Heibei Daily, the Heibi province, which borders Beijing, set an 8% growth goal due to “unprecedented pressure” from air-pollution controls, compared to last year’s target of 9%.
President Xi Jinping is putting an emphasis on environmental protection and containing debt on top of short-term economic growth objectives.
“We are facing increasingly severe difficulties and contradictions,” Hebei Governor Zhang Qingwei said in Hebei Daily.
Additionally, Guizhou projects an expansion of at least 12.5% in 2014, compared to 14% in 2013. Guangxi set a 10% target, down from 11% last year. Fujian expects 10.5% growth, compared to 11% target in 2013. Gansu sees 11% growth this year, versus last year’s target of 12%. Ningxia set a 10% target, falling short of its 12% goal last year.