China's Long-Term Bull BG: Consumption is the Key for Chinese Tech Giants, Not Tariffs
The CEO of Baillie Gifford pointed out that China's exports to the U.S. account for less than one-tenth of total retail sales, and the importance of the domestic consumption market far exceeds trade frictions. Taking Meituan as an example, despite a 21% drop in stock price this year due to price wars, it will still thrive thanks to its strong market position
Globally renowned asset management company Baillie Gifford believes that the prospects of Chinese tech giants now depend more on domestic consumer sentiment than on tariff policies.
On July 10, according to media reports, Baillie Gifford CEO and Managing Partner Tim Campbell stated in an interview, "The actual situation of Chinese consumers is much more important than the tariff agreement with the United States." China's exports to the U.S. account for less than one-tenth of China's total retail sales, making the importance of the domestic consumption market far exceed that of trade frictions.
He believes that the Chinese economy is undergoing a normal economic cycle similar to that of modern developed economies, and policymakers have ample choices to manage this process.
Data shows that Meituan is one of Baillie Gifford's largest holdings in China. Campbell stated that this Chinese company has "performed exceptionally" and achieved strong growth in the domestic market.
Although Meituan's Hong Kong stocks surged 85% last year, they have fallen 21% this year due to the price war in the food delivery platform. Campbell believes that with a strong market position, companies like Meituan will continue to thrive in the near future.
On a global level, Baillie Gifford is betting on companies it believes are adaptable, such as Amazon and South Korean e-commerce company Coupang, expecting them to become even stronger after the economic shocks potentially caused by Trump's tariff policies.
Gavin Scott, a partner at the Edinburgh-based fund management company, stated that this judgment is based on the experience of the 2008 global financial crisis. He said:
"The strongest companies in various industries will thrive because their competitive positions become even stronger."
Baillie Gifford's Long-Term Global Growth Fund has achieved a return of 23% over the past year, outperforming 95% of its peers, while the S&P 500 index rose only 13% during the same period
