Global investors pivot to China for diversification: Pimco president

Pimco, which managed over $2 trillion in assets as of June, has been guiding its clients, especially those outside the United States, towards these Chinese bonds. This pivot comes amid a complex global economic landscape shaped by technological advancements like artificial intelligence and geopolitical factors such as US trade policies.

The Trump administration's tax, trade, and immigration policies, including increased tariffs, were initially expected to dampen global growth. However, economic growth has proven resilient, partly due to the intersection of these policies with the rise of AI. This has led to a divergence in economic trends, with those benefiting from the AI race experiencing significant gains, while others lag.

In the US, large companies have focused on absorbing tariff costs and competing on price, driving productivity gains through AI adoption to manage labor costs and protect margins. Conversely, smaller, labor-intensive companies exposed to trade and immigration policy changes have faced greater challenges. AI-related investments in the US have surged, doubling data center investments.

Asian economies, including China, Taiwan, Japan, and South Korea, have also demonstrated resilience by dominating the production of chips, servers, and related hardware crucial for AI infrastructure. Despite US tariffs impacting bilateral trade, China is finding new markets for its goods and is accelerating its own AI infrastructure development and manufacturing productivity improvements. However, China's economy remains reliant on exports and inventory building due to sluggish domestic consumption and falling investment.