“What’s going to happen with the trade war going on between China and the US?”
We were asked that question last week during a Startup Grind event in Hong Kong.
I was fortunate to be speaking with Hong Kong hedge fund manager Jay Kim, founder of ReadWrite Labs Kyle Ellicott, partner at 500 Startups Edith Yeung, and community lead at Greylock Partners Chris McCann.
It wasn’t the first time I had heard that question while I was there in Hong Kong. The truth is that many investors and companies are very concerned about the trade war between the two largest economies in the world – the US and China.
The fallout for individuals caught in the crossfire could be significant.
However, there is something even bigger than the trade war going on. It’s the unstoppable momentum that China and the rest of Asia have.
For those outside of Asia, it’s difficult to fathom the progress and developments that are currently underway throughout the region.
For example, a whole list of cities throughout China have economies larger than many countries. And these are Chinese cities that you’ve probably never heard of.
Looking at the map above, it’s still a bit difficult to understand what this all means on a global scale. The simplest way to think about this is to ask yourself a question:
“If you were an entrepreneur who wanted to target a fast growing population that has an exploding middle class, where in the world would you look?”
The answer is China.
Critics will point to the idea that China’s economy is completely supported by the products that they export to the US and beyond. While this was certainly true in the past, the reality is that now China has many more global trading partners and their own economy is much more self-sustainable.
Many new companies throughout China are thriving from simply selling to the ‘local’ population… which can be enormous.
Currently, there are 65 cities in China that have over 1 million people. In Europe, there are only 36 cities with over 1 million people, while the US has only 10.
The metropolitan area of the Southern Chinese city of Guangzhou has a population of 45 million people, which is about the same size as the country of Spain. If Guangzhou were it’s own country, it would rank number 30 in size.
So, if we look back to the original question about the China and US trade war, the answer is still unclear. We don’t know what’s going to ultimately happen between the two super powers.
But, when it comes to China (and Asia), we know exactly what’s going to happen. Their economies are going to continue to grow as their populations continue to become wealthier.
For investors who get involved early, the upside is enormous.