The Case for Investing in Chinese Stocks

China is a complex country. Its rapid growth and industrialization put it in the class of emerging nations, but its vast size lends it some qualities of a developed country. In just a few decades, China has accomplished "one of the most rapid and far-reaching transformations of a major economy that the world has ever seen," says Robert Horrocks, chief investment officer at investment firm Matthews Asia.

China is already a global powerhouse, the world's second-largest economy and the biggest exporter of goods on the planet. Now it's in the throes of a new phase of economic development--one driven by technology and consumer spending rather than focused on manufacturing and infrastructure.

Yet investors are skittish, and Chinese stocks struggled last year. In 2018, the MSCI China index sank 18.9%. One problem is that economic growth in the Middle Kingdom (a loose English translation of the Mandarin word for China) has been slowing. In recent years, the country's gross domestic product has grown around 6% annually, down from the 10% average growth of previous