The special relationship' between Britain and the US took a bit of a knock recently. For once, the slap in the face came from our end rather than from across the Atlantic.
Britain agreed to join the Asian Infrastructure Investment Bank a China-led potential rival to the World Bank. The US had hoped we wouldn't.
And then France, Germany, Italy, South Korea and Australia all decided to join in too.
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The details of the story aren't that important. I can't say that I find the workings of transnational jobs-for-the-boys institutions terribly compelling.
But the big picture is clear whatever your view on China, its economy is becoming increasingly important. And as an investor, that means it offers opportunities you can't ignore.
China's economic woes haven't held back its stock market
Meanwhile, the key manufacturing sector is barely growing, although the latest data suggests that things might be picking up.
But as we often point out, economic growth and stockmarkets bear virtually no correlation with each other in any case. And judging by the action in the Shanghai stock exchange, all of China's woes are rather irrelevant at the moment.
The country's markets have had a cracking run in the last year or so. And that's only continued in 2015. That's partly because speculating on the property market has been swapped for speculating on the stockmarket the number of trading accounts being opened hit the highest on record last month. (According to Bloomberg, nearly 6% of the accounts were opened by people deemed not literate', which is hardly reassuring.)
It's also because of that modern-day financial panacea an accommodative central bank. The People's Bank of China (PBOC) cut its main interest rates at the end of February. Since then the Shanghai Composite index has soared to its highest level in more than seven years.
Why the boom can continue
The head of the PBOC Zhou Xiaochuan seems to agree, according to Bloomberg. "China's inflation is declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not China can have room to act."
In other words, expect interest rate cuts and stimulus'. As a result, the research group reckons the Shanghai Composite will hit 4,000 by the end of the year.
A classic cheap-money driven frenzy? Perhaps. But it's interesting to see that global investors haven't entirely caught on. As Josh Noble points out in the FT, "the Hang Seng China Enterprises Index the most accessible gauge of Chinese shares for global funds has added just 4% this year." That compares to 17% for Shanghai.
As a result, the gap between prices on stocks listed both on the mainland and in Hong Kong has hit a four-year high in favour of the mainland. Goldman Sachs apparently now expects offshore Chinese shares to rise by another 28% or so from current levels by the year-end.
We've been recommending China for a while and I'd happily stick with it just now. One way to play the market (both the mainland and Hong Kong) is to buy the JP Morgan Chinese investment trust (LSE: JMC). It currently trades on a discount to net asset value of around 9%.
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