China has lifted Covid-19 restrictions and pivoted back to focusing on the country’s growth. China’s outsize position in emerging markets has created a dilemma for many investors. For years, as companies from the world’s second-largest economy grew rapidly and became more valuable, China came to make up more than 40% of some major international benchmarks for stocks and corporate bonds. Investment funds with similarly large allocations to Chinese assets did well in 2019 and 2020, when the country’s rise drove gains in emerging markets.

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