China's transformation: A strategic frontier for global asset managers

China is accelerating dialogue and cooperation with Western countries — from progress on a US‑China trade deal to high‑profile visits by Western leaders, including recently the UK Prime Minister. During that time, I had the opportunity to visit the country alongside the UK Prime Minister, meeting Premier Li Qiang and engaging with leading national financial institutions.

From a business perspective, China now represents a significant opportunity for asset managers seeking growth opportunities. The demand for the expertise that firms such as Aberdeen Investments can provide is both substantial and growing.

Global asset managers have steadily advanced their presence in China since full ownership restrictions were lifted in 2020. While the country boasts a strong base of local players, international firms like Aberdeen Investments - backed by more than a century of global investment experience - are well positioned to navigate diverse economic cycles, geopolitical risks, and international exposures with confidence.

China’s expanding investment universe: Al and industry leaderships

With over 30 years of experience investing in Chinese assets, Aberdeen Investments sees China as an important market that deserves a place in global investors’ portfolios, with a wide range of compelling investment opportunities.

China remains a key growth driver within the emerging market universe and Artificial Intelligence (“AI”) represents one of the most exciting frontiers. The launch of DeepSeek at the start of last year surprised global competitors with its sophistication and strength. It is not just the US that the whole world is betting on; China is now in the reckoning.

Beyond AI, China has firmly overtaken Germany to become the world’s largest vehicle exporter[1], with electric vehicles (“EVs”) driving much of this growth. The country also installs more industrial robots annually than Japan, Germany, and the US combined[2]. In green energy, China is the undisputed global leader in solar power, dominating both manufacturing and installations.[3]

Notably, Chinese domestic assets exhibit relatively low correlation with other widely held global asset classes, as they are influenced by unique economic, political, and monetary policy dynamics. This differentiation provides meaningful portfolio diversification and can help global investors achieve a stronger overall risk‑return profile.

Empowering Chinese investors through global diversification

Global asset managers are well placed to serve domestic investors in China by introducing a broader range of investment solutions and enhancing diversification.

China’s 15th Five‑Year Plan (2026–2030) places strong emphasis on expanding two‑way capital flows - encompassing both inbound foreign investment and outbound domestic investment - by advancing capital account liberalisation, strengthening cross‑border financial mechanisms, and aligning regulatory frameworks with international standards. These initiatives mark a significant step toward greater alignment of China’s financial system with global markets.

Against this backdrop, global asset managers can help Chinese investors construct more resilient, risk‑adjusted portfolios by offering international diversification, advanced risk management, and access to global investment experts and strategies. Diversifying across regions with different economic drivers helps smooth returns and lower volatility. This not only benefits individual investors but also contributes to greater stability in China’s financial markets.

Unlocking Pillar 3: A Trillion-Dollar Pension Market

China’s pension reforms, particularly the rollout of “Pillar 3” private pensions, also present a significant opportunity for global asset managers to expand into one of the world’s fastest‑growing retirement markets.

With China’s rapidly ageing population - over 400 million retirees are expected by 2035 [4] - the demand for diversified retirement solutions is set to accelerate. Analysts project the private pension market could reach RMB 22–28 trillion (USD 3–3.8 trillion) by 2030 [5], creating a vast pool of investable assets.

Aberdeen Investments is at the forefront of supporting the UK pension market, with a strong heritage in insurance and pensions investment -our capability recently highlighted by our appointment by one of the largest UK insurers and pension providers to assist with their transition into private markets. As the wealth and investment needs of Chinese consumers grow, new solutions are being put in place to respond.

In that context, global asset managers like Aberdeen can leverage our expertise in retirement‑focused products such as lifecycle funds and target‑date strategies. These offerings align with the long‑term horizon of pension investors while appealing to younger savers seeking sustainable investment options.

China is not only a growth market but a strategic frontier that will shape the future of global asset management.

[1] The China Passenger Car Association; CNN, September 2023
[2] IFR – International Federation of Robotics, September 2025
[3] Statista, September 2025
[4] The State Council of the People’s Republic of China, January 2025
[5] KPMG; The Asset, June 2023