From the Editor's Desk

Why investors cannot escape China exposure

For america’s commerce secretary, midway through a trip to Beijing, to describe China as “uninvestible” might once have prompted an unpleasant diplomatic spat. Yet when Gina Raimondo did so a month ago, it barely caused a ripple. That was not just because the rest of her visit was a clear attempt at rapprochement. It was also because it is now firmly established that American companies, as well as Western investors more generally, see China in such terms.

It is tempting, then, for Western investors to look at these risks and conclude that China is just too troublesome to think about, which is exactly what many are doing. On the face of it, avoiding China should be a reasonably straightforward task. After all, the world’s second-biggest economy does not have a particularly large presence in equity indices. Take, for example, msci’s broadest index of global stocks, ranked according to market value. American shares occupy a weight of 63%. By contrast, Chinese ones manage barely a twentieth of that, at just 3%.

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