China Stocks: Opportunity or Danger?

Chinese stocks have long been both fascinating and fearsome to American investors. On the one hand, it’s easy to understand the potential in a nation of 1.4 billion people, many of whom are joining the ranks of the middle class. It’s also easy to understand consistently high economic growth rates, even if they have slowed from nearly 15% 10 years ago to just under 7% today. On the other hand, risk can be higher. China is not a democracy, and the government can change things at any time. That said, this combination of higher perceived political and geographic risk often leads to attractive valuations in stocks.