Energy Development Projects in China Should Foster Growth for This ETF | ETF Trends

Not content to just win on the technology front, China is looking to also bolster its energy development with backing from the federal government. The second largest economy is also working towards a greener initiative as it attempts to reduce its own carbon footprint.

These efforts were supported by President Xi Jinping, who commented in an October 16 speech at the opening of the Chinese Communist Party’s 20th National Congress in Beijing, according to an S&P Global Commodity Insights report.

“We should promote an in-depth energy revolution, enhance clean and efficient use of coal, accelerate the development of a new energy system, and get actively involved in global governance in response to climate change,” Xi said.

Addressing climate change was a common refrain in Xi’s speech, according to the report. This would mark a drastic turn from a country whose energy infrastructure relies heavily on coal but confirms the ongoing global transition to greener energy sources.

“We must stick to the philosophy that ‘clear waters and lush mountains are our silver and gold.” Harmonious co-existence of human and nature should be a mission embedded in our development plans,” Xi said.

“We should collectively promote decarbonization, pollution mitigation, afforestation, and reforestation. We need to prioritize ecosystem in our development, save our energy and resource, as well as facilitate green, low-carbon development,” he added.

Growth Opportunity for This China ETF

With the government’s backing for more energy development initiatives, it could foster high growth in the Chinese energy sector. If that’s the case, look for thematic investment opportunities funds like the Global X MSCI China Energy ETF (CHIE).

CHIE seeks to provide investment results that generally correspond to the price and yield performance, before fees and expenses, of the MSCI China Energy IMI Plus 10/50 Index. The underlying index tracks the performance of companies in the MSCI China Investable Market Index that are classified in the energy sector, as defined by the index provider.

CHIE gives investors the following:

  1. Targeted exposure: CHIE is a targeted play on the energy sector in China — the world’s second-largest economy by GDP.
  2. ETF efficiency: In a single trade, CHIE delivers access to dozens of energy companies within the MSCI China Index, providing investors with an efficient vehicle to express a sector view of China.
  3. All share exposure: The index incorporates all eligible securities as per MSCI’s Global Investable Market Index Methodology, including China A, B, and H shares, Red chips, P chips, and foreign listings, among others.

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