Best investments 2015: why China looks good

If you can keep your nerve, investing in Asia’s red dragon can bring sizeable rewards

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(Image credit: 2013 AFP)

Last year saw the biggest stockmarket listing in history. Alibaba, the giant online retailer, came to market valued at more than $230bn, making its founder, Jack Ma, China’s wealthiest man. If investors ever needed reminding that China is a land of vast potential opportunities amid all the risks, this was it.

And there are lots of risks to investing in China, no doubt about it. Corporate governance is shaky (although as Tesco amply demonstrates, there’s no guarantee of top- notch governance even in developed markets). The country’s economic growth is slowing down, something that has concerned the government. And there’s a gradually deflating property bubble whose impact on the wider economy no one is entirely confident of. In all, China is in the middle of a tricky transition – its growth so far has been based on making cheap goods for other countries, and on spending money on building roads, cities and shopping malls that there is not yet sufficient demand for. Now China has to justify that spending by moving towards being a more consumer- oriented economy – not an easy thing to do, particularly when the government is still trying to control so many elements of the transition.

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