Don’t Get Distracted by China Tech Gossip

By Liqian Ren, WisdomTree Director of Modern Alpha

China is leading global equity markets higher this year, expanding on its strong gains from last year. This is particularly true for tech stocks: The pandemic accelerated the adoption of Internet-oriented businesses in China, and we see major growth ahead for China’s tech stars.

But there are serious questions that could affect a longer-term outlook for China, like what to make of the tense political environment.

We expect the Biden Administration will be more friendly to global trade partners, alleviating some pressure on China and the global economy from Trump’s trade wars. Yet not all of the political debate is centered on U.S. actions. Will China’s government take actions to limit the growth of its Internet powerhouses like Alibaba?

We believe the answer is clearly yes. The outcome will be a push-and-pull game among Chinese regulators, entrepreneurs and public sentiments.

Given all the questions surrounding Chinese technology, we want to highlight the most important points for investors: