Global Wealth Planning

China Without Owning China

China may not feature prominently in your investment portfolio, but that does not mean your wealth is unaffected by its economy. From European luxury brands and American technology companies to international manufacturing and mining investments, many assets held by wealthy families have connections to China that are not immediately obvious. With 2027 approaching, we examine where these exposures arise, what they could mean for investment returns and what is worth discussing with your private bank or wealth manager.

The International Monetary Fund’s February 2026 assessment projected that China’s economic growth would slow from 5.0% in 2025 to 4.5% in 2026 and 4.0% in 2027, with weak domestic consumption and the prolonged property downturn continuing to weigh on demand. Exports have helped support the Chinese economy, although their growth has also brought local manufacturers into more direct competition with companies in Europe and the United States.

The effects can be felt in the earnings of a European luxury business, the production costs of an American technology company, the margins of a German carmaker or the prices received by a mining company in Australia. Some businesses benefit from their Chinese connections, while others face weaker demand or tougher competition. How much of that exposure sits within a global investment portfolio may not be apparent from its geographical allocation.

Where China Enters A Global Portfolio

Through the revenues of Western companies

China was once a major source of growth for international companies selling cars, luxury goods, industrial machinery and consumer products. Its expanding middle class and investment in infrastructure attracted substantial foreign investment, while multinational companies increased their local production and distribution.

Slower economic growth, subdued consumer spending and stronger domestic competitors have since changed the outlook. Businesses that previously relied on rising Chinese sales now face weaker demand, pressure to cut prices and declining market share, even when their operations elsewhere continue to perform well.

A closer look at companies listed in Germany’s DAX, MDAX and SDAX indices shows how China’s economic slowdown has affected German businesses across almost every sector since the beginning of 2026. Mercedes-Benz and Adidas are among the companies that have faced pressure, illustrating how developments in China can affect the earnings of familiar European businesses.

For someone holding international consumer brands, carmakers or industrial companies, the geographical allocation shown in a portfolio report may understate the importance of Chinese demand. A company may generate a relatively modest share of its sales in China but rely on those sales for a larger share of its profits. Local joint ventures and differences in financial reporting can make that dependence harder to assess, particularly when investments are spread across several funds.

Through the materials and components companies buy

Little or no revenue from China does not mean a company can operate without Chinese suppliers. Many manufacturers depend on factories and processors there for materials used in their products, particularly in industries where production is concentrated among a small number of suppliers.

According to the International Energy Agency’s Global Critical Minerals Outlook 2026, China accounts for more than 90% of global refined supply of gallium, graphite, manganese and rare earths. These materials are used in semiconductors, electric vehicles, industrial machinery, energy infrastructure and defence equipment.

When Beijing introduced export controls on seven heavy rare earth elements in April 2025, manufacturers outside China encountered supply problems that forced some carmakers to cut production or temporarily suspend operations. In July 2026, the IEA warned that implementing the broader restrictions announced later that year could put an estimated USD 6.5 trillion of annual downstream production outside China at risk. Those expanded measures were suspended until November 2026, leaving manufacturers uncertain about the rules that would apply heading into 2027.

Even companies buying components from European suppliers may depend indirectly on Chinese refining or materials used earlier in the production process. A disruption can delay production, increase costs and reduce profits, while finding alternative suppliers may take years. The IEA estimates that capital costs for refining projects outside the dominant supplier can be between 20% and more than 150% higher, depending on the material and project.

Limited alternatives to Chinese suppliers can leave companies exposed to prolonged production disruptions, higher costs and reduced profitability, even when their direct business in China is relatively small.

Through competition with Chinese manufacturers

Chinese manufacturers increasingly compete with European companies in their home markets and abroad, particularly in cars, machinery, electronics and other industrial products. The European Central Bank found in its 2026 analysis that euro area producers had been losing market share to Chinese competitors, especially since 2020, as exports from China expanded into more advanced manufacturing.

While European exports to China have declined since 2021, Chinese producers have been selling more electronics, automotive products and industrial goods internationally. Established manufacturers now face competitors offering similar products at lower prices, often supported by extensive domestic production networks.

The pressure was evident at the Paris Motor Show in October 2026, where Chinese carmakers presented new electric and hybrid vehicles while European manufacturers worked to develop more affordable models. Volkswagen chief executive Oliver Blume warned of the competitive difficulties facing Europe’s mass-market producers, as Chinese brands continued expanding their dealer networks and operations across the region.

For shareholders, stronger competition can mean slower sales growth, pressure on profit margins or the need for expensive investment in new products. Other businesses may benefit from buying cheaper Chinese components or supplying technology to manufacturers expanding their operations. Both effects can appear in a portfolio invested mainly in European or American shares.

Through commodity markets

China is a major buyer of metals and industrial materials used in manufacturing, construction and infrastructure, while its refining and processing industries influence the global availability of many commodities.

Weakness in the Chinese property sector can reduce demand for materials used in construction, although investment in electricity networks, electric vehicles and manufacturing continues to support other commodity markets. Global battery deployment for electric vehicles reached 1.2 TWh in 2025, an increase of almost 30%, according to the IEA, illustrating the continued growth in demand for materials used in electrification.

Mining companies listed in Australia, Canada or London may therefore depend heavily on Chinese industrial activity, even when their operations are located elsewhere. For investors holding commodity funds, mining equities or resource-related private investments, changes in Chinese demand can affect selling prices, company earnings and ultimately portfolio returns.

How Much China Exposure Is Hidden In A Global Equity Index?

Research published by MSCI in June 2026 illustrates how much a portfolio’s actual economic exposure can differ from its geographical allocation. Chinese companies accounted for only 2.5% of the MSCI All Country World Index (ACWI), although companies within the index generated almost 12% of their revenues from China. A further measure showed that 8% of the index’s exposure to goods supplied through first- and second-tier suppliers came from China.

These figures measure different kinds of exposure and cannot be added together, but they show why the country allocation in a global equity fund may tell only part of the story. An investor with little direct exposure to Chinese securities may still hold companies whose sales or production depend heavily on the country.

MSCI found a similar pattern for the United States. Nearly 64% of the index consisted of US-domiciled companies, yet their revenue exposure to the American market was just below 44%. Where a company is headquartered or listed tells investors relatively little about the countries in which it does business.

For wealthy families whose assets are managed across several banks, investment funds and private-market vehicles, the figures raise a question about the quality of portfolio reporting. Each manager may provide a geographical breakdown of their investments, but those reports do not always reveal whether apparently unrelated holdings rely on the same Chinese industries.

Revenue exposure is generally easier to estimate than dependence on individual suppliers, particularly in private markets where less information is publicly available.

What Changes Heading Into 2027?

China’s slower domestic growth and continued expansion in manufacturing are affecting industries in different ways. Luxury brands, carmakers and industrial suppliers remain exposed to Chinese consumer and business spending, while manufacturers based in China are competing for customers in markets where European and American companies have traditionally held stronger positions.

Trade policy will influence how that competition develops. European authorities have sought ways to address the expansion of Chinese vehicle imports, and Chinese manufacturers have responded in part by developing production and distribution networks outside their home market. Building vehicles locally may help them overcome some trade barriers, but it does not remove the pressure on established European manufacturers.

Critical-mineral supplies face another period of uncertainty as the suspension of China’s broader rare-earth export restrictions approaches its scheduled expiry in November 2026. Manufacturers seeking other sources must contend with limited refining capacity, specialised technology and higher production costs outside China, making diversification difficult even when alternative mineral deposits are available.

Not every development is negative for international companies. Businesses purchasing cheaper Chinese components may benefit from lower costs, while suppliers of alternative materials and processing equipment could attract new customers. Investment in electricity networks and industrial technology may also support demand for particular commodities, despite the weakness in China’s property market.

What This Means For Your Wealth

An international portfolio may look diversified across countries, sectors and investment managers while several holdings remain dependent on the same developments in China. A European equity allocation, an American technology fund and a private-equity portfolio could all contain companies reliant on Chinese electronics manufacturing, with a separate mining allocation adding exposure to Chinese industrial demand.

Although the investments may sit in different parts of a wealth report, problems affecting one industry or supply chain could reach several holdings at once. The size of that combined exposure matters more than the percentage of the portfolio invested directly in Chinese shares.

Selling every business with Chinese customers or suppliers would make little sense. Some companies have strong competitive positions, alternative production arrangements or sufficient pricing power to absorb higher costs, while others are heavily dependent on a few customers or suppliers and would struggle to replace them.

Private-market investments deserve particular attention because valuations are updated less frequently and investors may have limited opportunities to sell. A business facing weaker orders or higher production costs can suffer financially well before those problems appear in its reported valuation.

The purpose is not to eliminate every connection to China. Families managing substantial wealth need to know whether the exposure is understood, whether too much depends on the same developments and whether the portfolio remains suitable for their investment objectives, liquidity needs and future spending commitments.

What To Ask Your Wealth Manager Before 2027

Request a fuller picture of your China exposure

Ask your private bank, family office or investment adviser to estimate how much of your portfolio depends on China’s economy, including exposure through international companies, investment funds and private assets. The analysis should go beyond the percentage invested directly in Chinese securities.

Find out where the main risks are

Request a summary of the largest sources of China exposure across your holdings. Your adviser should explain whether they arise mainly from Chinese customers, manufacturing and supply chains, commodity demand or competition with Chinese companies, and which investments could be most affected.

Check whether different investments carry the same risks

Ask whether holdings managed by different banks or investment managers depend on similar developments in China. A portfolio may appear diversified across countries and industries while several investments remain exposed to the same economic risks.

Ask what could happen to your wealth

Request an assessment of how weaker Chinese demand, trade restrictions or supply disruptions could affect your portfolio. The analysis should show the potential consequences for investment returns, valuations and liquidity, including assets that cannot easily be sold.

Review whether your exposure still makes sense

Discuss the findings in the context of your long-term investment objectives, future spending commitments and tolerance for losses. Exposure to China is not necessarily undesirable, but it should reflect a considered investment decision rather than arise unintentionally through unrelated holdings.

Agree on what needs to change

If the review reveals excessive concentrations, ask your advisers to present the available options, their costs and their possible effect on returns. Changes may involve adjusting individual holdings, investment mandates or future allocations rather than selling every asset connected to China.


References (APA)

Amicucci, A., Gnocato, N., Gunnella, V., Lindemann, C., Merendino, A., & Montes-Galdón, C. (2026). The impact of China’s industrial rise on the euro area. ECB Economic Bulletin, Issue 3/2026. European Central Bank.

Houston, L., & Kim, S. K. (2026, June 25). Do you know the real geographic exposure of your portfolio? MSCI.

International Energy Agency. (2026). Global critical minerals outlook 2026.

International Energy Agency. (2026). Electric vehicle batteries. In Global EV outlook 2026.

International Monetary Fund. (2026, February 18). IMF Executive Board concludes 2025 Article IV consultation with the People’s Republic of China.

Sommer, U. (2026, February 24). Globalisierung: Umsätze deutscher Konzerne in China erodieren. Handelsblatt.

Reuters. (2026, October 16). Chinese automakers make tech-led pitch for Europe’s premium car market.

Reuters. (2026, October 16). Europe’s carmakers set course for managed decline.



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