China is coming to be regarded as something of a safe haven for investments of late, which is maybe not what any would have expected 10 or even 5 years ago.
But with oil prices climbing thanks to drama with Iran, China now looks less risky, even with its track record of over-zealous government intervention in the private sector.
While markets everywhere are shaky and energy costs keep rising, China’s showing some surprising strength. Bloomberg’s data backs this up too. Chinese stocks haven’t dropped as much as others around the world, the yuan’s holding steady versus the dollar, and their government bonds barely budge.
And this mix isn’t common: solid currency, calm bonds, and stocks that aren’t tanking.
Certainly compared to its neigbours: Japan, South Korea and India have all take bigger hits to their economy since the Iran war.
China’s stability didn’t just happen. The government’s been prepping for this sort of turmoil for decades.
It's maybe got a lot to do with China's vesting in local businesses and its control over the clean energy supply chain: it's much more insulated from oil price shocks compared to practically any other country....
Is China actually a safe haven, or does it just look better compared to everywhere else falling apart?
Safe havens used to mean strong institutions, transparency, and faith in the rules. While with China there are doubts about their numbers, constant government meddling, and the tricky geopolitics make people nervous.
But at the end of the day it's all relative, and even with the above China is RELATIVELY safe!
China’s shot at being a “safe haven” is really about how the world’s changed. It’s not that China suddenly got safer. It’s just that everywhere else got worse.
At the moment, China’s resilience comes from years of steady moves and careful management. Whether that’s enough in the long run remains to be seen....
But right now, one thing’s obvious: in a world full of surprises, what counts as “safe” isn’t what it used to be.
