An opinion essay. I am not a licensed investment advisor.

Why I’m looking beyond the U.S. market

As a European looks at the world today, there are really only two nations threatening territorial expansion at the expense of the sovereignty of European nations: Russia and the United States. As a Canadian, that list shortens to one country making threats against our sovereignty. And yet, while we’ve responded with our elbows up at the liquor store and the grocery aisle, most of us still keep a large chunk of our investment savings in the U.S. market. With every new tariff, each 51st state comment, each time we get called “nasty”, we should look at where our RRSPs are invested as much as what groceries we consume.

This is not just as a political statement, but is also sound risk management. The U.S. is withdrawing from world trade and has effectively sanctioned itself by tariffing nearly every country on earth. Its official economic statistics have become harder to trust as independent agencies come under political pressure, which means we genuinely don’t know the full picture of what’s happening in the U.S. economy. What we can see doesn’t look good: weak job numbers, a national debt that just surpassed $40 trillion, and a stock market whose gains are carried almost entirely by a handful of mega-cap tech companies propped up by circular AI financing arrangements and off-balance-sheet debt run through special-purpose vehicles that, to my eye, look uncomfortably like the structures that preceded past crashes. And the administration has openly stated its preference for a weaker dollar.

Here’s the part that matters even if you don’t share my politics: if you’re a Canadian who will eventually spend your money in Canada, a U.S. dollar devaluation silently confiscates your U.S. market gains. For every percentage point the USD falls against the CAD, a percentage point of your U.S. returns evaporates on conversion. The market can go up and you can still come out flat, or worse. Currency risk isn’t a footnote; at this moment in history, it is the central story.

Canada is not alone in its elbows up. Every country in the world is looking to diversify trade away from the U.S., and that will invariably weigh on U.S. market performance over time. So where else can money go? Yes, China is an authoritarian country. But its role in the world is changing rapidly, and I think it deserves a serious look. Here’s the evidence.

1. The world is taking note of China’s stability and leadership

The polling on this is striking:

• Pew Research now finds that a median of 41% of adults across 25 surveyed countries see China as the world’s top economy, versus 39% for the U.S.
• Gallup’s World Poll across 130+ countries found China’s approval rating (36%) edging past the United States (31%) in 2025 — the widest margin in China’s favor in nearly twenty years. Disapproval of U.S. leadership hit a record-high 48%.
• By 2026, Pew reported that China is now viewed more favorably than the United States in most nations surveyed. Canada is a vivid example: in 2023, 57% of Canadians viewed the U.S. positively and only 14% viewed China positively. Today more Canadians hold a favorable view of China (44%) than of the U.S. (33%).
• On trade, the tilt is structural, not just sentimental: China is the largest trading partner of over 120 countries, and has been largest trading partner for most countries in from Asian to Europe to South America. Canada is one of the few laggards in this respect, but it does not bode well for US companies hoping to expand operations outside the USA.

2. China’s trade expansion: Belt and Road and beyond

Since 2013, the Belt and Road Initiative has built out ports, railways, power grids and digital infrastructure across some 150 participating countries, with 53 African nations involved to varying degrees. Chinese lenders have extended over US$170 billion in loans to 49 African countries and regional institutions, and China is Africa’s largest bilateral trading partner and foreign direct investor. The BRI has drawn fair criticism like debt sustainability and opaque terms and Beijing has responded by shifting toward smaller, greener, lower-risk projects. But the strategic effect is undeniable: while the U.S. builds tariff walls, China has spent a decade physically wiring itself into the trade infrastructure of the Global South. As a member of RCEP, it also anchors the world’s largest trading bloc.

When the U.S. cut aid and raised tariffs on the very countries China has been courting, it handed Beijing a soft-power victory it didn’t have to earn. This will translate into better economic performance over the long term.

3. Environmental leadership as economic strategy

Whatever you think of China’s politics, its clean-energy build-out is the largest industrial undertaking on the planet, and it is constructing the foundation of a carbon-free economy — not just within China, but globally:

• Scale: China’s cumulative renewable capacity passed 1,400 GW by early 2026 — roughly equal to the entire rest of the world combined. Its 280 GW of solar added in 2025 alone exceeded the total installed solar capacity of the United States.
• Economic engine: clean energy drove more than a third of China’s GDP growth in 2025, with investment of about US$1 trillion — roughly four times what it put into fossil fuels.
• Manufacturing dominance: China produces 80%+ of the world’s solar modules and roughly 70% of EV batteries, and controls over 70% of global EV production. Chinese manufacturing has driven solar module costs below $0.24/W, making renewables the cheapest power source in most of the world.
• Exports: cleantech exports hit record highs through 2025, and exports of EVs, batteries, solar and wind products to the Global South reached a record 47% of the total. Cheap Chinese solar and EVs are how much of the developing world will de-carbonize.

The “new three” technologies of EVs, batteries, solar are now the backbone of Chinese industrial policy, a vision the government has been executing since at least 2006. Meanwhile the U.S. just stripped hundreds of billions in clean-energy credits and loans out of its own economy, and is proudly doubling down on aggressive military operations to fuel it’s oil dependence. Venezuela, Greenland, Iran and interference with Alberta separatism are nothing more than a continuation of a consistent pattern of leveraging it’s military to secure more oil no matter the environmental and human cost. When you invest in the US stock market, you continue this system. When you invest in China, you invest in a green future.

4. Talent, patents, and an open AI ecosystem

China’s innovation capacity is no longer a debatable proposition:

• China filed nearly 70,000 PCT international patent applications in 2024, maintaining the top global position, and now hosts 26 top science-and-technology clusters, more than the United States, per WIPO’s Global Innovation Index.
• In generative AI specifically, Chinese inventors filed over 38,000 patents from 2014–2023: more than the U.S., South Korea, Japan and India combined (the U.S. filed about 6,300). WIPO now ranks China the world’s top holder of AI patents.
• The talent flywheel is spinning in reverse of the old brain-drain: Chinese universities have closed much of the research gap with the West, and a growing number of top Chinese-born researchers are returning home. This flow has been greatly accelerated by U.S. visa hostility and funding cuts.
• Critically, China’s AI ecosystem has developed along open-source lines. DeepSeek’s breakthrough models, Alibaba’s Qwen family, and a swarm of smaller labs are releasing open weights, and the government’s own 2026 work report set the explicit objective of ensuring Chinese models lead the global open-source ecosystem. Contrast this with the American approach, where frontier AI is concentrated in a couple of closed companies whose leaders nobody should trust, financed by circular deals in which chipmakers invest in their own customers. An ecosystem of many smaller startups filing patents at an incredible rate is, to me, a healthier foundation than a duopoly run by corrupt fascists.

5. The 15th Five-Year Plan (2026–2030): a coherent strategy

In March 2026 the National People’s Congress adopted the 15th Five-Year Plan, covering 2026–2030. Whatever else you can say about Beijing, it publishes a coherent, long-term economic strategy and then largely executes it , something no Western government currently does. The major investment thrusts:

• Technological self-reliance — the centerpiece. “Decisive breakthroughs” targeted in semiconductors, industrial machine tools, high-end instruments, foundational software, advanced materials, aircraft, and gas turbines — precisely the areas where China still depends on the U.S., Europe and Japan. Chances of success: high in most areas. Export controls have accelerated rather than stalled domestic substitution, though leading-edge chips remain the hardest problem.
• AI+ Initiative — diffusing AI through existing industries, efficient use of limited compute, and leading the global open-source model ecosystem. Chances of success: high. China’s strength has always been application and scale rather than pure frontier research.
• New quality productive forces — advanced manufacturing, robotics, bio-manufacturing, new energy, aerospace. Chances of success: high — this is a continuation of what already works.
• Green transition — binding targets on energy and environment, grid modernization, storage. Chances of success: very high — the economics now carry it without subsidy.
• Boosting domestic consumption — loan subsidies, financing guarantees, social-services spending to raise household demand. Chances of success: mixed. This has been a stated goal for fifteen years; the property overhang, local-government debt, and weak consumer confidence are real, unsolved problems. This is the plan’s weakest link and the biggest fundamental risk to Chinese equities.
• Upgrading legacy industries (steel, petrochemicals, shipbuilding) and supply-chain resilience. Chances of success: moderate to high. This has already been proven out by China’s lightning fast response to the war in Iran
• Expanded openness — an updated Catalogue of Encouraged Industries for foreign investment, deeper BRI corridors (China–Europe Railway Express, New Western Land-Sea Corridor). Chances of success: moderate — geopolitics cuts both ways.

The point isn’t that every target will be hit. It’s that there is a plan — internally consistent, funded, and measured versus a U.S. policy that reverses itself hourly on social media. For a long-term investor, policy coherence is a form of safety.

6. The pure investment case: cheap, under-owned, and finally paying shareholders

Set the geopolitics aside entirely for a moment. Even on cold portfolio math, the case stands on its own:

Valuation. Chinese equities trade at roughly 11x forward earnings (MSCI China ~10.9–11.7x) versus about 20x for the S&P 500. The Magnificent Seven trade far richer than that. You are buying a dollar of Chinese earnings for about half the price of a dollar of American earnings. This is the answer to the obvious objection — “China has been uninvestable for years” because that pessimism is exactly why it’s cheap. The U.S. market is priced for AI-driven perfection; China has been priced for a worst-case scenario that hasn’t materialized. Cheap assets carry a margin of safety that expensive ones don’t. Even if I’m only half right about everything else in this blog post, I’m paying half price to find out. And the market has started to notice: MSCI China is up roughly 30% in 2026, its strongest run against U.S. markets in nearly a decade, with the rally broadening beyond internet giants into materials, healthcare and renewables.

Under-ownership. China produces roughly 17% of global GDP but represents only a low-single-digit percentage of the MSCI All Country World Index, and most Western institutional portfolios are underweight even that sliver. This is the coiled spring: if global finance merely drifts back toward a neutral weight, the flows into a relatively modest free float would be enormous. The world doesn’t need to fall in love with China in order for their markets to outperform the rest of the world, the world just needs to adjust to the current reality and Chinese markets will skyrocket.

Shareholders are finally getting paid. Here’s the honest explanation for why my own decade of China investing produced mixed results: for thirty years, China’s economy grew spectacularly while minority shareholders captured almost none of it — dilution, empire-building, and weak payout culture ate the gains. That’s what has been changing. Beijing’s “market value management” reforms are pushing listed companies, especially state-owned enterprises, to raise dividends and buy back stock, and Hong Kong buybacks have run at record levels. The CSI 300 now yields about 2.7%, comfortably above what AAA-rated renminbi corporate bonds pay — a yield gap that pulls domestic money from bonds into stocks. If the link between Chinese growth and Chinese shareholder returns is genuinely being repaired, the single biggest historical flaw in the China trade is being fixed.

The domestic savings rotation. Chinese households sit on one of the largest pools of bank deposits on earth, earning next to nothing, and their traditional wealth vehicle, property, is no longer trusted. That money has few places to go, and equities are the obvious candidate. A structural rotation of domestic savings into domestic stocks is a bid under this market that has nothing whatsoever to do with what Washington, or Western fund managers, think of China.

De-dollarization ties it all together. The gold conversation and the China conversation are the same conversation. The People’s Bank of China has been accumulating gold for years; a growing share of BRI and Global South trade settles in renminbi; and central banks worldwide are quietly diversifying reserves away from the U.S. dollar. The world’s monetary authorities are making, at institutional scale, the same decision this essay is proposing at household scale: reduce concentrated exposure to a currency whose custodian has announced it wants that currency weaker.

And a final Canadian point: as the U.S. relationship sours, Canada itself is working to rebuild trade ties with China. Positioning your portfolio where your country’s trade is heading, rather than where it’s leaving, is a forward looking strategy.

7. The empty chair: where Canada and China sit at the table — and the U.S. doesn’t

There’s a simpler way to see the U.S. retreat from the world than parsing tariff schedules: just count the empty chairs. In January 2026, the White House issued a memorandum withdrawing the United States from 66 international organizations at once — 31 UN entities and 35 non-UN bodies — on top of the withdrawals already executed in 2025. Canada and China remain members of essentially all of them. Here’s a sample:

Organization / Agreement	Canada	China	United States
Paris Climate Agreement	✅ Member	✅ Member	❌ Withdrew (notified Jan 2025; effective Jan 27, 2026)
UN Framework Convention on Climate Change (UNFCCC) — the foundational climate treaty since 1992	✅ Member	✅ Member	❌ Withdrawing — the first and only nation ever to leave
Intergovernmental Panel on Climate Change (IPCC)	✅ Member	✅ Member	❌ Withdrawing (Jan 2026 order)
World Health Organization (WHO)	✅ Member	✅ Member (now the largest state funder by default)	❌ Withdrew (Jan 2025); was previously ~20% of the budget
UNESCO	✅ Member	✅ Member	❌ Withdrew (announced July 2025, effective Dec 31, 2026)
UN Human Rights Council	✅ Participates	✅ Member	❌ Withdrew (2025)
World Trade Organization (WTO)	✅ Member, dues paid	✅ Member, dues paid	❌ Active Sabotage Stopped paying dues in 2024 and is in, “Category 1” arrears status. and is blocking all Appellate Body appointments, leaving the dispute system paralyzed
UN Conference on Trade and Development (UNCTAD)	✅ Member	✅ Member	❌ Withdrawing (Jan 2026 order)
UN Women / UN Population Fund (UNFPA)	✅ Member	✅ Member	❌ Withdrawing
UNRWA & major UN humanitarian funding (UNHCR, World Food Programme)	✅ Contributor	✅ Contributor	❌ Defunded / sharply cut
USAID / official development assistance	✅ Active donor	✅ Active lender & donor (BRI, FOCAC)	❌ USAID closed entirely, 2025

A few of these deserve a second look. Leaving the UNFCCC — not just Paris, but the underlying 1992 treaty ratified by 198 countries — makes the U.S. the only country on Earth outside the framework of international climate cooperation. The WTO situation is nearly as remarkable: the U.S. built the institution, and it now sits in the same arrears category as Bolivia, Djibouti and Gambia while its tariffs ignore the rules it wrote. And the January 2026 memorandum’s list runs deep into the plumbing of the international system: the International Law Commission, the Peacebuilding Commission, UN University, the Global Counterterrorism Forum, the Commission for Environmental Cooperation , not to mention the NAFTA/CUSMA withdrawal.

Why does this belong in an investing essay? Two reasons. First, rules are infrastructure. Global commerce runs on treaties, standards bodies and dispute mechanisms the way the internet runs on protocols. A country that exits the rule-making rooms doesn’t escape the rules, it just loses its vote on them, and its companies inherit the friction. Second, someone fills every empty chair. As the U.S. withdraws funding and personnel, China has been methodically expanding its role in the very same institutions — becoming WHO’s most important state funder, leading UN specialized agencies, writing telecom and EV-charging standards, anchoring RCEP. When Gallup measured global approval of major powers in 2025 — notably before the January 2026 mass withdrawal — the U.S. had already fallen to 31% with a record-high 48% disapproval. The institutional retreat and the reputational slide are the same story, and both are headwinds for U.S. assets held by foreigners — which is what your RRSP’s S&P 500 fund is.

Canada, meanwhile, remains inside every one of these rooms. Our trade diversification options run through institutions the U.S. has abandoned, which is one more practical reason a Canadian portfolio shouldn’t be wired to a country that’s cutting the wires.

8. How Chinese stocks actually work (and the withholding-tax angle)

A quick mechanical primer, because the plumbing matters:

• A-shares trade in Shanghai and Shenzhen in renminbi. Foreigners access them mainly through the Stock Connect programs, which link the Shanghai and Shenzhen exchanges to Hong Kong — so mainland-listed shares can effectively be traded through Hong Kong brokerage access.
• H-shares are mainland-incorporated companies (ICBC, China Construction Bank, PetroChina etc) listed directly on the Hong Kong Stock Exchange. Many big names are dual-listed as both A- and H-shares, and the H-share often trades at a discount.
• Red chips and HK-incorporated companies (Tencent, Alibaba’s HK listing, AIA…) are incorporated outside the mainland and listed in Hong Kong. I tend to stay away from these stocks.

Now the tax point. The U.S. now imposes a 15% withholding tax on dividends paid to Canadian residents (under the treaty rate; it’s waived in an RRSP but not in a TFSA or taxable account). Hong Kong, by contrast, levies no withholding tax on dividends at all. One nuance to be accurate about: for H-shares — companies incorporated on the mainland — China itself withholds 10% enterprise income tax on dividends to non-resident holders. But for Hong Kong-incorporated companies and red chips, you receive the full dividend. Given that many quality HK-listed names yield 4–6%, the withholding difference is real money compounding over a decade.

9. Buying Hong Kong stocks directly from RBC Direct Investing

Since Royal Bank’s acquisition of HSBC Canada, RBC has pushed hard into international capability, and in December 2024 RBC Direct Investing became the only Canadian bank-owned brokerage to offer online trading on the Hong Kong Stock Exchange (along with London, Frankfurt and Euronext Paris). You can hold Hong Kong dollars natively in a non-registered account, so you’re not forced through repeated currency conversions.

The fees are much higher than a Canadian trade: minimum commission of HK$288 (roughly CA$50) per online order, plus exchange levies and Hong Kong’s 0.1% stamp duty. On a HK$300,000 trade, total costs run about HK$613 — around 0.2%. That stings if you’re day trading. But for a buy-and-hold investor, it’s a one-time cost instead of a management fee every single year. Hold for ten years and the direct route wins by a mile. For buy-and-hold, the lack of ongoing management fees makes this a genuinely attractive option.

10. The fund route: FCHNA.B vs ZCH

If you’d rather not pick stocks, here are the three vehicles I’ve looked at — and they are not interchangeable:

• CI ICBCUBS S&P China 500 Index ETF (CHNA.B) — The closest thing on the TSX to “buy the whole Chinese market”: 500 of the largest, most liquid Chinese companies, including mainland A-shares held directly, sector-balanced, with a 0.59% MER. Holding stocks directly also avoids the extra layer of U.S. withholding tax that ETFs wrapping U.S. funds suffer. The catch: it’s tiny (~C$21M AUM), so spreads are wide — use limit orders.
• BMO MSCI China Selection Equity Index ETF (ZCH) — Despite the generic name, this tracks an ESG-screened index that excludes tobacco, alcohol, gambling, weapons and unconventional oil & gas — and it’s extremely top-heavy: Tencent alone is roughly 22–25% of the fund and Alibaba another 13–17%. You’re substantially making a bet on Chinese mega-cap internet platforms. MER 0.67%. Fine if that’s what you actually want; many buyers don’t realize that’s what it is.

My own take: for broad China exposure, CHNA.B is the most honest instrument of the two

11. What could go wrong: the honest risk list

If this blog post is going to be worth anything, it has to survive contact with the strongest objections — so here they are, stated plainly.

The VIE structure. When you buy Alibaba or Tencent — in Hong Kong or anywhere — you are mostly not buying direct ownership of the Chinese operating business. You’re buying shares of a Cayman Islands holding company that holds contractual claims on the mainland entity through a Variable Interest Entity structure, because foreign ownership in sectors like internet services is restricted. These contracts have never been fully tested in a Chinese court, and Beijing has tolerated rather than formally blessed them. The VIE structure has held for twenty years and through multiple crackdowns — but “has held” is not “cannot break.” Know what you actually own.

Regulatory whiplash. My argument for policy coherence cuts both ways: a state coherent enough to build the world’s clean-energy industry in a decade is coherent enough to erase an industry by decree. In 2021 Beijing effectively abolished the for-profit tutoring sector overnight, and the tech crackdown took 70%+ off Alibaba at the lows when Jack Ma was not at the helm. The practical lesson isn’t to stay away. it’s that in China, the Five-Year Plan is also a map of political protection. Sectors aligned with national priorities (semiconductors, green energy, advanced manufacturing, AI infrastructure) enjoy tailwinds; sectors that conflict with social policy goals are expendable. Read the plan not just as strategy but as a safety map.

Taiwan. This is the tail risk everyone is thinking about, so let’s name it: a military conflict over Taiwan would likely freeze, sanction, or crater Chinese assets held by Westerners, and no amount of valuation cushion would matter in that scenario. This risk is a large part of why Chinese equities trade at half the U.S. multiple.

The domestic economy is not fixed. Property remains a drag, local-government debt is unresolved, youth unemployment is high, and consumer confidence is fragile. The Five-Year Plan’s consumption push is the weakest link in the strategy, and if household demand stays depressed, earnings growth will disappoint no matter how cheap the starting multiple.

On position sizing. Because of all the above, this is a diversification argument, not a conviction-bet argument. My personal strategy is not holding more U.S. than China exposure. It reflects my own read and my own risk tolerance after a decade in this market. For most people, something like 10–25% of equity exposure in China/Asia is a meaningful diversification away from U.S. concentration without betting the retirement on any single scenario. Balanced with a shift to European stocks (and the associated withholding tax hit), a fully internationally diversified portfolio helps buffer against geopolitical risk and currency fluctuations while helping us address global warming in a meaningful way.

Finally

I’ve been investing in China for over a decade, and my returns have been mixed. I am not recommending China as a surefire way to sidestep the crash of a U.S. tech bubble, nothing is surefire, and China has delivered brutal drawdowns of its own.. I’m not a stock investor by profession and I’m not a licensed investment advisor, so take everything here with a grain of salt and do your own research.

What I do strongly believe is this: in today’s volatile world, diversification is not optional. The era of blindly parking Canadian savings in the S&P 500 and collecting both market gains and currency gains is over. Personally, I would not hold more U.S. stock than China stock at this point. When choosing between between a country tearing up its own institutions and trading relationships, and a country executing a coherent thirty-year industrial strategy, China at this point is looking like the clearer long-term proposition. You may weigh it differently. But weigh it with an open mind and do your research.

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Not investment advice. Consult a licensed advisor before making investment decisions.

How to Invest in China as a Canadian