China is no longer an EM outperformer

China’s economy has grown faster than other EMs in aggregate every year outside of the pandemic so far this century. But that run is now coming to an end and we expect growth on our China Activity Proxy to undershoot the EM average over the coming years (even if the official data show otherwise). The long-running drag from China’s construction sector will weigh on prospects for EM commodity producers too. Instead, other EMs with promising manufacturing prospects including India, parts of South-East Asia and North Africa are poised to outperform.