• China consumes 75% of the world’s iron ore ¹ and 50% of the world’s copper², coal ³ and cement⁴
• At current levels, China uses in two years as much cement as the United States did throughout the entire 20th Century ⁵
• 2025 real GDP growth is expected to be just under 5% for China in 2025 compared to 2.5% for the US⁶

China at a Glance

China remains a relatively fast-growing economy (figure1) with dominance in certain areas of the market and a growing influence in electric vehicles and components essential for the broader clean energy and electrification revolution.

The economy has been on a path of gradual liberalisation since the death of Mao Zedong in 1976. 1.6 billion people now live in China, and the economy has been booming since the country joined the World Trade Organisation in 2001.

Source: JP Morgan Guide to the Markets Q3 2025

The Industrial Dominance 

In terms of the industrial dominance, figure 2 illustrates some of the areas of comprehensive Chinese leadership globally. To draw your attention to two examples in particular; China produces and consumes over 50% of the world’s cement. At current usage levels, China uses in two years as much cement as the United States did throughout the entire 20th century. One project alone, the Three Gorges Dam, used eight times as much concrete as the Hoover Dam⁷.

In terms of another heavy industry, commercial ship building, in 2023 China delivered 972 commercial ships: the US delivered ⁸. In other words, China’s heavy ship production is currently running at 138-times that of the US. It is not jus the ‘dirty’ industries where China is currently leading the market; it also has a monopoly over the supply of minerals critical to the energy transition⁹.

Source: Graphic – Bowmore Asset Management Data – (1), (2), (3), (4), (8), (9)

The Outlook for China 

However industrial dominance does not necessarily translate into a justification for greater investment exposure. Company earnings are a relatively good indicator of future investment returns – if we assume a company valuation is a sum of its future cash flows. China’s corporate earnings, however, remain fairly stagnant whilst US corporate earnings are strong¹⁰.

Additional reasons for a cautious stance on China would be the rock-bottom consumer confidence levels and subdued house prices the country is experiencing. Chinese households, more than most countries, have a considerable amount of their net worth tied up in property and property prices are going through a significant malaise causing consumers to feel worse off.

Bowmore portfolios 

China, whilst making up a relatively small part of Bowmore portfolios, is a fascinating case study in industrial dominance. When looking beneath the bonnet of a risk portfolio (RP) 5 portfolio the broad weighting to China is just under 3%, this rises to 4.25% for a higher risk RP7 portfolio.

Our specific China allocation is through the Matthews China Discovery strategy which seeks outperformance by investing in China’s lesser-known small entrepreneurial companies. The fund has a particular tilt towards higher value-added growth sectors benefiting from innovation and capital efficiency. Over the last year the fund has delivered strong performance of +30.0%.

Additional China exposure is gained through our emerging market tracker fund and broader active Asia focussed funds.

Source: LSEG Datastream, market data as at 07/08/2025

Sources:

1. Reuters, June 2025
2. Wood Mackenzie, August 2024
3. Worldometer, August 2025
4. BBC, April 2024
5. Sustainability by numbers, March 2023
6. JP Morgan, August 2025
7. Nature, 2006
8. Construction Physics, June 2025
9. Mine, January 2024
10. Wellington Management, September 2025