Economic shifts in China have global ramifications because of the significant part it plays in global trade as one of the biggest importers and exporters.
Khalaf explained: "As we saw during the pandemic, China is also a critical link in global supply chains and local disruptions can lead to delays, shortages, and cost increases for companies around the world.
"As one of the world's largest economies, China's growth rate also has a direct influence on global economic growth projections which anchor investor sentiment."
UK investment in China and Asia-Pac
Regardless of concerns relating to the way in which China's fortunes affect the rest of the world, assets in China and Asia-Pac funds indicate the UK investor still wants exposure to the region.
Table: Funds under management by sector as at October 2023
| IA Sector | Total funds - £m |
| Asia Pacific Excluding Japan | 33,517 |
| Asia Pacific Including Japan | 790 |
| China/Greater China | 2,138 |
| Europe Excluding UK | 57,028 |
| Europe Including UK | 2,736 |
| European Smaller Companies | 1,824 |
According to data from fund management trade body the Investment Association, current assets in the China sector stood at £2.1bn in October, and £33.5bn in Asia Pac ex Japan.
In 2018 this stood at £2.7bn and £27.6bn respectively.
Investors will also have exposure through emerging markets and global funds, so this is only an indication of demand for exposure to the longer-term Chinese growth story.
For Kelly Chung, investment director and head of multi-assets for Value Partners, China and Hong Kong equities present a mixed bag: not great in the short-term but maybe for those playing a longer game.
She said although the Chinese government "gave a clear message of policy support with its unexpected RMB 1trn bond issuance, investor confidence remains weak about next year’s economic growth.
"We expect the market will remain range-bound in the near term and believe it will take time for consumers and the market to regain their confidence."
Similarly, with tight liquidity and the RMB under pressure due to the strong US dollar, Value Partners expected limited upside in Hong Kong’s equities market.
Opportunities
Longer term, however, the return of Chinese tourism, a gentle stimulus programme rather than aggressive government action, and Chinese companies starting to curb their enthusiasm and repair their balance sheets might mean there are opportunities ahead.
Dzmitry Lipski, head of funds research, interactive investor, said: “We believe the economic backdrop remains positive.
"The government has showed it is prepared to stimulate the economy through monetary easing measures, such as borrowing rate cuts, and the Chinese consumer is expected to bounce back.
"This should also be beneficial for other regional economies, with millions of Chinese tourists travelling overseas each year."
He said the recovery in Chinese equities should continue, considering relatively cheap valuations versus history and other developed markets, combined with institutional holdings being the lowest in five years.
