China’s appeal as portfolio diversifier grows, BlackRock strategist says

China is increasingly being viewed by global investors as not only a growth opportunity but also a potential portfolio diversifier, as higher inflation, market volatility and changing correlations challenge traditional asset-allocation strategies, according to BlackRock’s global chief investment strategist.

“China can provide exposure to different economic drivers,” Li Wei said at the asset manager’s 2026 Midyear Outlook in Hong Kong earlier this week.

She added that Chinese assets, including government bonds, could offer diversification benefits because they were shaped by domestic growth and monetary policy cycles that did not always move in line with the US Federal Reserve or other developed markets.

Li’s comments came as China is delivering steady growth coupled with low interest rates, in contrast with Western economies that are troubled by rising inflation and likely interest-rate increases. The Chinese yuan is also poised to appreciate further against the US dollar, given China’s growing economic reliance on its technology prowess and strong exports.

“One area we are paying attention to is Chinese government bonds, especially in this environment when traditional hedging tools have become less effective,” Li said.

That view has been echoed by other global financial institutions.