Lu Wenjie of BlackRock Greater China: China's economy will maintain strong growth in 2026, with greater certainty in power and healthcare industries.

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What do foreign investors think of the Chinese economy and the global economy? After the A-share market completed a round of gains, how did their views change? Facing the booming AI trend, what are their views on the opportunities and risks in various industries? Lu Wenjie, Investment Strategist for Greater China at BlackRock, recently shared his latest perspectives at the BlackRock China 2026 Investment Outlook.

AI May Usher in a New Wave of Historic Construction

In the face of the surging AI development, Lu Wenjie believes that AI may usher in a new wave of historic construction. Investment amounts in the AI field are massive, causing significant impacts on the global economic structure. The structure of the U.S. economy has shifted from being driven primarily by consumption to being jointly driven by AI and consumption.

Lu Wenjie believes that the proportion of AI investment in the U.S. economy can already be compared to China’s “4 Trillion Yuan” stimulus stage in 2008. The concentrated large-scale investments led by AI have very significant effects on the total output and growth rate of related economies.

He also pointed out that the most controversial and debated aspects of the current AI industry chain are whether AI can be commercialized in the long term, and its impact on employment. The latter is increasingly becoming an important topic in investment discussions.

Global Central Banks Will Favor Monetary Easing

Lu Wenjie also believes that U.S. monetary policy should remain dovish in the future. Judging from the current market situation, two rate cuts this year are reasonable. Considering AI’s increasing substitution effect on labor, the Fed will likely focus more on employment risks than inflation in the future.

He also mentioned the recent sharp drop in gold prices, which is actually the market “voting” on central bank independence. Gold’s previous rally was based on concerns about a decline in U.S. dollar assets and out-of-control debt. The nomination of the new Fed Chair partly alleviated worries that the central bank would be tied to government debt, which became a factor triggering the pullback in gold prices.

China's Economy Will Maintain Strong Growth

Lu Wenjie also believes that in 2026, China's economy will continue to hold a leading position globally, with export growth as the most important variable.

He believes that in the landscape of the global economy, China’s economy is very significant and plays a large role. There is a pronounced dual structure in China’s economy: strong manufacturing and exports, but continued decline in real estate and lukewarm consumption. This pattern will likely continue this year—which is already quite an achievement—especially given that export growth has exceeded most global investors’ expectations.

He believes that in the second half of 2024, corporate profits will bottom out and rebound gradually. PPI (Producer Price Index) will recover somewhat this year. China remains a manufacturing-driven economy, so PPI recovery will directly help corporate profits. Looking at A-shares, earnings revisions by sector show that, for traditional industries, including raw materials, finance, and industrial sectors, the profit revision is obvious. This rebound won’t be as rapid as a V-shaped one; it’s a firmer, fundamental rebound, and there are clear investment opportunities in this trend.

Electric Power Becomes the “New Constraint” on Tech Stocks

Lu Wenjie also thinks that in terms of AI investments, the area with the highest certainty is actually electricity/power.

He notes that there are two fundamental constraints to AI investment: whether funding is sufficient, and whether electricity is sufficient.

On funding, profit growth in the technology sector is entirely keeping up with the increase in stock prices, leaving ample capital for continued high-speed investment, and balance sheets are healthy enough to raise funds from capital markets.

On electricity, there is huge global divergence. Projections show AI’s power consumption will double between now and 2030. He believes it is impossible for the U.S. to add enough new electricity generation capacity in just 4–5 years, so the U.S. is highly likely to face power shortages—it’s just a matter of time.

As a result, current overseas investments in power are having a significant pull effect on the global industry chain, from which many Chinese companies are benefiting. China-made power equipment is undoubtedly the strongest in the world, for both new and traditional energy. In a power shortage, it’s impossible not to procure power equipment made in China; therefore, electrical equipment and technology are a highly certain investment direction derived from AI.

Healthcare is an Overlooked Innovative Force

Lu Wenjie also believes that healthcare is an industry and investment direction worth paying attention to globally. Healthcare is currently undervalued—it hasn’t risen much in the past two years. In fact, AI is driving its development, whether in new drug development or medical services. Healthcare acts as a stabilizer: when everyone focuses on technology, healthcare, which can develop steadily and is also driven by AI, is a rare investment direction.

In terms of consumption, the U.S. has striking structural characteristics: the generation with the highest consumption power is the baby boomers, those born between 1945 and 1965. They earned high incomes during their working years, and after the 1965 Social Security Act, had pension security. Salary income, pension investments, and real estate investments gave them strong consumption power, and the most important spending for seniors is on supplements and healthcare.

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