Why we should embrace the Chinese dragon

It’s been a long time since we believed that China was growing at 7%. So we aren’t much bothered by – or even very interested in – the official numbers out this week showing that it definitely isn’t. What we are interested in is how China is changing as it moves out of its super-fast growth phase – and just how that will change things for us in the UK.

We’ve written several times over the last few months that we don’t see China as taking a particularly different development path to that trodden by the likes of Japan and Korea. It has spent a few decades driving growth via fast export growth and infrastructure development. Now it wants to move to a more consumer-based economy; to build a strong middle class; and to carve out a new international role for itself.

It is looking outwards for new investments, new relationships and new markets. You can see that in its One Belt One Road (OBOR) strategy to revitalise the routes of the old Silk Roads; in its creation of the Asian Infrastructure Investment Bank (AIIB, designed to support infrastructure in the Asia Pacific region); in its investments across Africa; and in the way it is courting the likes of us.

President Xi hasn’t come to the UK to sightsee. He’s come to make deals and friends. Should we be making those deals and friendships? Yes. It isn’t exactly risk-free (or comfortable), but at a time when the global centre of economic gravity is shifting East we need to be pivoting that way too. After all, everyone else is.

America has looked a little askance at us for signing up to the AIIB and for rolling out every red carpet we have to Xi this week. But Barack Obama’s at it too. As he noted in 2012, “our nation is at a moment of transition” and “we will of necessity rebalance towards the Asia-Pacific region”. Quite.

There’s quite a focus on China in the magazine this week. We look at how China’s slowdown is hitting our steel industry. We look at the resilience of the Chinese consumer (the Chinese are big spenders – which is why it makes sense for Cameron to make it easier and cheaper to get tourist visas for them to come and spend in the UK). And Peter Frankopan gives us his take on our Chinese visitors. First dates are always tricky, he says.

But that doesn’t mean we shouldn’t be open to them. Finally, we look at an investment in Asia that we think long-term investors should be even more keen on than they are on China – Vietnam. It’s growing. It’s reforming. And it’s cheap. In today’s overpriced world, that’s an extraordinary thing. One of the Vietnam funds we suggest is going in my self-invested personal pension (Sipp) – alongside the holding I still have in the Fidelity China Special Situations Fund (still up 12% on the year, despite the Chinese stockmarket crash).