Nervousness on China natural as new rate cycle beckons

Focus on particular economic data points misses the extent of the change in China's economy in recent years.

Headlines have focused on China in recent weeks, with many investors expressing concern about the pace of economic growth and whether 7% is achievable and the recent decision of the authorities to devaluate the yuan. This comes against the backdrop of general nervousness as we head into a new interest rate cycle in the US. By early September, the MSCI China index had fallen by 11.8% in US dollar terms, taking it back to levels seen in mid-2014. It has recovered somewhat, but remains down significantly year to date. The proximate cause has been economic growth in China, but that has no...