With economic growth of more than 10 per cent a year for the past four decades, few investors need convincing of the long-term potential of Chinese assets. The rapidly rising number of dedicated China funds is testament to this. These funds received a further boost in April when the China Securities Regulatory Commission (CSRC) announced that international fund managers would be allowed to invest a combined $80bn in China’s capital markets, up from the previous limit of $30bn.
Less noticed, however, are the CSRC’s moves to encourage foreign managers to distribute to Chinese investors. Last year, in response to US protestations about the dominance of the big state-owned banks in the Chinese mutual fund market, the CSRC allowed the creation of new sales channels, including independent advisers. Beijing is also believed to be considering the creation of a pension fund system that mirrors the US’s 401k defined contribution plans.
So distribution prospects are improving. Given that from 2012 to 2050 China’s cities will grow by 348m people, according to Credit Suisse, the overall proposition for fund managers is promising.