Investing in China: Silk (Road) Purse or Sow’s Ear? An Interview with Scott Malpass and Jay Willoughby

TIFF Investment Management

Laurence B. Siegel

Research

13 Pages

TIFF Investment Management interviews Scott Malpass and Jay Willoughby to explore whether China is a compelling long-term investment or a structurally flawed one. The paper highlights a tension between China’s rapid economic rise and concerns around governance, arguing strong GDP growth has not consistently translated into investor returns.

Key Takeaways

Growth Vs Returns Gap: Despite decades of ~9% GDP growth, emerging markets like China have often underperformed developed equities, challenging the assumption that growth automatically drives returns.
Institutional Risk Premium: Governance differences and weaker investor protections create structural risks, with some investors suggesting China exposure indirectly via developed markets instead of direct allocation.
Allocation Still Rising: Institutional investors continue increasing exposure, with China now representing a meaningful share of global market cap near $16.6T despite underrepresentation in indices around 6%.
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