Baillie Gifford Report Highlights Long-Term Opportunities in China Amid Rising Fears and Misconceptions

ERBIL (Kurdistan24) – Despite mounting skepticism surrounding China’s economic trajectory, British investment management firm Baillie Gifford argues that long-term opportunities in the world’s second-largest economy remain substantial—if investors are willing to look past the current fear narrative.

In a comprehensive report published from Edinburgh, Ben Buckler, an Investment Specialist at Baillie Gifford, emphasized that China’s fundamental strengths—from technological innovation to renewable energy leadership—are being overshadowed by short-term sentiment shaped by politics and regulatory anxiety.

“The combination of a dynamic entrepreneurial culture and bold top-down policies is helping to deliver a number of world-leading companies,” Buckler writes. “The question is whether fear of China’s challenges should be balanced against ‘FOMO’: fear of missing out on the long-term opportunities it offers.”

From Disruption to Opportunity

Buckler acknowledges that the Chinese economy is undergoing a gear shift after decades of explosive growth. Factors such as declining labor force expansion, property sector instability, and tighter regulations have spooked investors. Yet, these very disruptions, he argues, are laying the groundwork for the next stage of innovation-led growth.

While China’s GDP growth has slowed from its historical highs, the country remains an engine of global transformation: China has contributed more to global growth in the last decade than the entire G7 combined. It dominates 37 out of 44 critical technological sectors, from robotics and quantum technologies to green energy, according to the Australian Strategic Policy Institute. China has more 5G users and infrastructure than the rest of the world combined, and leads the electric vehicle (EV) market with more than 60% of global EV sales.

Shifting Domestic Priorities

The report explores how China is reorienting its economy inward, moving from an investment-heavy model to one focused on consumption and innovation. This includes substantial state support for AI, smart cities, semiconductors, and green technologies—areas seen as crucial to China’s long-term competitiveness and global leadership.

A Misread on Regulation

Buckler critiques the Western interpretation of China’s regulatory environment, noting that recent signals from Beijing point to a renewed effort to support the private sector, especially after last year’s Party Congress and the appointment of Li Qiang as premier. Private enterprise now makes up 60% of GDP, 70% of tech innovation, and 80% of urban employment, making its vitality essential to the regime’s legitimacy.

“Regulation will come and go,” Buckler concedes, “but the balance between innovation and control is returning.”

China’s Global Role Expands

Baillie Gifford’s report also warns against viewing China solely through a Western geopolitical lens. From Africa to Latin America, China’s economic model is offering an alternative to Western-style liberal capitalism. While geopolitical tensions—particularly with the United States—are real, Buckler argues they often obscure investment fundamentals.

Looking to the Future

Buckler concludes that China, for all its risks, offers long-term investors a “glimpse of what’s to come” in sectors that will define the next generation—AI, automation, renewable energy, and digital infrastructure.

“Only China presents us with such radical change on such a large scale. It has nurtured some extraordinary companies that help provide a lens into the future,” he writes.
As macro headlines continue to stoke uncertainty, Baillie Gifford urges a shift in investor perspective—from fear to discernment. With low valuations, inefficiencies ripe for alpha, and deep structural shifts underway, China may be less a market to avoid and more a market not to miss.

 
Baillie Gifford, founded in 1908 and headquartered in Edinburgh, is a partner-owned investment firm with offices in London and New York.