3 ETFs to Capitalize on China’s Bold Plans for Economic Dominance

Being runner-up won’t fly with China for very long. As the country recovers from the Covid-19 pandemic, China looks to re-invest itself in its bold plans for economic dominance as it eyes the current number one spot occupied by the United States.

“In a world rocked by the coronavirus pandemic and tensions with the U.S., the Chinese government has come out with yet another batch of policy terms to bolster its own economy, this time under the vague umbrella of ‘dual circulation,’” a CNBC report said. “The phrase refers broadly to two circles of economic activity — internal and external — with greater emphasis than before on business at home. The jury is out on whether ‘dual circulation’ reflects a major change in Beijing’s economic policy, or how new the concept is at all.”

“The ‘dual circulation’ policy demonstrates China’s recognition that it won’t be able to rely on trade as much for the next two decades, as it did for the previous two,” Stephen Olson, research fellow at the nonprofit Hinrich Foundation, said in an email, per the CNBC report. “The pursuit of deep economic integration with China is increasingly seen in the US as a strategic mistake, which worked out extremely well for China, but considerably less well for the US.”

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^MSCNNTR data by YCharts

Here are three ETFs to watch:

  1. Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 300 Index. The fund will normally invest at least 80% of its total assets in securities of issuers that comprise the underlying index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market. The underlying index includes small-cap, mid-cap, and large-cap stocks.
  2. Xtrackers MSCI China A Inclusion Equity ETF (NYSEArca: ASHX): seeks investment results that correspond generally to the MSCI China A Inclusion Index. The underlying index is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.
  3. Xtrackers MSCI All China Equity ETF (CN): seeks investment results that correspond to the performance, before fees and expenses, of the MSCI China All Shares Index, which is designed to capture large- and mid-capitalization representation across all China securities listed in Hong Kong, Shanghai, and Shenzhen.

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