Despite the recent setbacks caused by the global coronavirus pandemic, which originated in China, the Asian nation seems to be poised to power through and continue its quest for global leadership.
For decades, China has been considered a “sleeping giant,” waiting to claim its place as a technological, industrial and financial powerhouse. Now, the wait is over. The giant has awoken and China is a global leader. When it comes to technology, however, being one of the best may not suffice for the Chinese. China is planning to claim, and hold, the top spot – and investment opportunities will be created with each progression.
eToro has created the ChinaTech Smart Portfolio which gives investors exposure to the Chinese technology market.
China’s Meteoric Rise
After years of being considered “the world’s factory,” providing services to other nations and being considered manufacturers of lower quality, China decided that it will no longer be in the shadows. It set its sights on becoming a global leader – and achieved this in tremendous speed. A good example of this is the smartphone market. Less than a decade ago, the US and Korea dominated this market. Despite producing many of their devices and components in China, the brands that were well-known in the market were American and Korean. Today, many of the world’s top smartphone makers come from China. Furthermore, virtually all categories of technology have a dominant Chinese player.
But how did this come to be? In 2006, when Apple was hard at work on its first iPhone and Facebook and Twitter began gaining popularity, China created its National Medium-and Long-Term Program for Science and Technology Development (MLP). This ambitious program put 2020 as the deadline for China becoming a power player in global technological innovation. By 2050, China wants to be the global leader in science and innovation. So far, the Asian giant is more than on-track. Since the mid-2000s, China has been second only to the US in R&D spending as a share of GDP¹. Today, around 20% of total world R&D spending comes from China².
Pursuing the Markets of the Future
It is obvious that the Chinese government has its sights set on long-term prosperity and technological growth. Therefore, it is no surprise that China is focusing on many industries and sectors that are expected to grow exponentially in the near future. For example, China is a global leader in both the development and deployment of 5G networks, which will be impacting all forms of communication in years to come.
Another emphasis is being placed on artificial intelligence. China has set a goal of becoming the world leader in AI by 2030 and has already shown impressive developments, such as AI-powered doctors, news anchors and more. And there are many other markets China intends to lead. Autonomous cars that rival anything the West is developing are already being tested by tech giants such as Baidu, and drones that can autonomously carry passengers have already been tested in the city of Guangzhou.
Adding these promising, emerging technologies to its already existing dominance in fields such as smartphones, semiconductors and app development, puts China on the path to the global technological dominance it seeks. Specifically in the app industry, apps such as Tencent’s WeChat, which successfully integrate digital payments into social networks, have cornered the Chinese market and reached success where western companies failed to penetrate.
Investing in Chinese Technology
With its long-term plans in place and a proven track record, it is easy to assume that China’s role in the global technology market will become increasingly significant. Naturally, there are copious amounts of money involved and many investors are looking for a way to invest in China.
To give investors exposure to Chinese technology, eToro has created the ChinaTech Smart Portfolio. This managed investment strategy focuses on Chinese technology companies, and global technology companies that generate a large proportion of their revenues in China. Investors who believe in the potential of Chinese technology and want to get in on this investment opportunity can already add ChinaTech to their watchlist.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Smart Portfolios is an investment management service provided by eToro Europe Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission. Your Capital is at risk
Sources:
- https://thediplomat.com/2018/08/understanding-chinas-technological-rise/
- https://ec.europa.eu/knowledge4policy/foresight/topic/expanding-influence-east-south/industry-science-innovation_en