Most investors think buying a China ETF means they've covered China. It turns out that's only part of the story. Beneath the household names sits one of the world's largest markets, filled with companies, industries, and opportunities that rarely make international headlines.
When people think about investing in China, the same companies usually come to mind: Alibaba, Tencent. Maybe BYD.
They're familiar names. They're widely covered by the media. And many investors assume owning them means they own "China."
During a recent conversation with Tian Pan, Head of Strategy at Prescient China, one idea kept surfacing. China is far bigger than the part of the market most investors ever get exposure to.
Why most China ETFs only show part of the picture
China's equity market is worth roughly $22 trillion, making it the second-largest stock market in the world.
Yet many traditional China ETFs follow the MSCI China Index, where a relatively small number of large technology and financial companies dominate the portfolio.
That means hundreds of other companies compete for the remaining allocation.
According to Tian, this can leave investors with concentrated exposure rather than broad participation in China's economy.
When people hear "Chinese shares," they often think of Hong Kong listings.
But China's mainland exchanges in Shanghai and Shenzhen are actually much larger.
These onshore markets contain thousands of businesses spanning manufacturing, healthcare, consumer goods, industrials, technology, renewable energy and more.
For many international investors, accessing these companies has historically been difficult.
That's one reason Prescient built its strategy around looking beyond the traditional offshore universe.
Emerging markets can create enormous opportunities. They can also move quickly.
Instead of tracking a fixed index regardless of market conditions, an actively managed approach gives portfolio managers the flexibility to adjust exposure as risks and opportunities evolve.
For Prescient, that also means allocating across different asset classes, including equities, bonds and cash when appropriate.
One statistic from the discussion helps explain why many long-term investors continue paying attention to China.
China's economy is worth around $21 trillion.
Growing at roughly 5% a year means adding close to $1 trillion of economic activity annually.
For investors with decades until retirement, Tian believes participating in even a portion of that long-term growth story deserves consideration within a diversified portfolio.
China has spent years being viewed as the world's factory.
Today, many investors are watching something different.
Innovation.
The conversation explored how Chinese companies are becoming global leaders across industries including:
Companies such as CATL have become dominant suppliers to global automotive manufacturers, while China's AI ecosystem continues developing rapidly alongside its US counterparts.
Artificial intelligence naturally became one of the biggest discussion points.
While many investors focus almost exclusively on US companies, China has built an increasingly competitive AI ecosystem of its own.
Models like DeepSeek attracted global attention by delivering capable open-source AI at significantly lower cost, while a growing number of Chinese AI companies continue serving one of the world's largest domestic markets.
Tian believes AI hardware remains one of the most exciting long-term opportunities, although he also acknowledged that it comes with meaningful risk and volatility.
No investment opportunity comes without uncertainty.
The discussion highlighted several factors investors should continue monitoring:
Rather than trying to predict every event, Prescient's approach focuses on managing risk while remaining flexible enough to adapt when conditions change.
Perhaps the biggest lesson from the conversation wasn't about China specifically.
It was about asking better questions.
Instead of simply asking:
"Do I have exposure to China?"
A more useful question might be:
"Which China am I actually invested in?"
Because two investments with the word "China" on the label can look remarkably different beneath the surface.
Understanding what you own, how it's managed, and where that exposure really comes from can be just as important as deciding to invest in the first place.
Watch the complete conversation with Tian Pan from Prescient China and explore how active management, onshore markets, and long-term trends are shaping one of the world's largest investment opportunities.
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