It’s unclear what role such party offices play in business operations, said Daniel Celeghin earlier this year, when he was managing partner at consulting firm Indefi.
But before the pandemic, he said, at least one large Western asset manager decided not to set up a subsidiary in China because once they learned establishing a party cell would be required, “that overcame all of the potential commercial gains.”
China’s appeal
Funds such as a few from WisdomTree offer ways to invest in emerging markets without putting investors’ money into state-owned enterprises.
In China, the market capitalization of non-state-owned companies has grown to about 47%, up from 35% a decade ago, according to Louis Luo, investment director of multi-asset at Abrdn.
The upcoming Chinese Communist Party congress will be more of a “confirmation of what’s been in place,” Luo said, adding that he expects a return of some policies that are more market-friendly. Sectors he’s betting on for the long term include consumption, green tech and wealth management.
Even with slower growth, China’s future attractiveness may lie in just offering an alternative to investing in other countries.
Global markets have been roiled this year by the U.S. Federal Reserve and other central banks’ attempts to curb inflation by aggressively hiking interest rates. But the People’s Bank of China has been going in the opposite direction.
A fundamental difference between emerging markets and developed ones is how independently they can make their monetary policy from the United States, Luo said. “From that point of view, I think China stands up.”