This transcript is from an interview conducted on March 9, 2025, in partnership with the Brown China Summit (BCS). Founded in 2014, the Brown China Summit is Brown University’s student-led hub for all things China. Their mission is to promote and facilitate constructive dialogues about China’s global role on all fronts. This year’s annual conference, BCS 2025: Silk Roads and Cyber Paths, featured panels on China’s Artificial Intelligence Strategy, China’s financial markets, US-China Relations and their impact on Southeast Asia, Religion in China, and the Chinese real estate crisis. Keynote speakers included Xiao Geng, seasoned financial regulator and Chairman of the Hong Kong Institution of International Finance, as well as Susan Thornton, former US Diplomat to China and Assistant Secretary of State for East Asian and Pacific Affairs. Besides their annual conference, BCS hosts regular Chinese movie screenings, talks with Chinese entrepreneurs/industry leaders, and other discussion events throughout the year. See their website for more information: https://www.brownchinasummit.org/
This interview was conducted with Liqian Ren, Director of Modern Alpha at WisdomTree Investments. She came to the United States almost 30 years ago after receiving her bachelor’s degree in computer science from Peking University in Beijing, China. Liqian Ren later received her master’s degree in economics from Indiana University–Purdue University Indianapolis and then her MBA and Ph.D. in economics from the University of Chicago.
This interview has been edited for length and clarity.
Niemiec: Can you share your thoughts about the current state of China’s economy and finances?
Ren: I think because China’s equity has had a lot of volatility in the last couple of years, it is investable–but it has a lot of risks. Clients are reminded that for [investing in] China, you need to know not only how much risk you can take, but also how much risk you are willing to take. China can endure for two or three years, but before the recent run, there was lots of very negative sentiment on China equity. It makes people wonder: did they make the right investment? There are a lot of opportunities in China to make money, but it’s also very risky.
The US and China are in competition, and the US does have a lot of tools that it could use. Some of those tools are not yet used. If the relationship deteriorates further, I assume that the US will use a lot of those tools, like limiting investment, for example. The US currently limits private equity investment in certain Chinese industries. It could be broader. It is possible that the US may also limit public market investment. China is still very vibrant in terms of entrepreneurship, so that is a positive.
Rivas: How do you think the current geopolitical tensions between the US and China are influencing investment strategies and opportunities?
Ren: The US-China relationship directly impacts China’s equity. If you look at tax sanctions and the trade war, these are generally negative for China and Chinese companies. Companies will not be able to make as much money as before. Tax sanctions are going to be the number one factor. On the other hand, China’s equity is also very driven by local factors. For example, of the two biggest rallies in the last six months, one was in September, which was driven by Chinese policy, and the second one was DeepSeek, which was driven by China’s AI development. It is true that the US-China relationship is a factor; but I will say, if I have to put it in a quantitative form, that China’s equity is 60 percent driven by domestic and local factors and 40 percent driven by the US-China relationship.
Rivas: Can you elaborate on DeepSeek?
Ren: DeepSeek itself and its technology are still not as good as ChatGPT. What really changed is people’s perception of Chinese AI development. The US in the last couple of years has been using mostly two tools to limit Chinese AI research. One is tax sanctions and not allowing China to acquire any chips. The second tool is limiting Chinese access to US research capability. Chinese students and researchers do have a hard time coming to the US to study.
DeepSeek is a little bit of a counter to these limits. The US was successful but not as successful as they thought they could be because DeepSeek, first, was able to develop China’s generative AI, using software investment in improvements, instead of chips, which is hardware, which the US is putting sanctions on. Secondly, a lot of DeepSeek’s researchers came from top Chinese universities like Zhejiang University. That is also kind of a signal that the US limiting the Chinese from coming and studying in the US is not working. A lot of people here thought, hey, if we don’t allow them to have chips, we don’t allow them to study, then China is not going to be able to develop AI in the near term. But it turns out, within about two years, you have a player that comes and delivers a good enough technology, again, not as good as the US, but good enough. But good enough is good enough for China.
Niemiec: Do you think DeepSeek could get as good or even better than what we have now?
Ren: Right now, I think the US is still the tech leader. China, in AI, will be a little bit behind until it’s the same as the US. However, in a few selective strap areas, like batteries, China’s technology probably is now very close to the US. With DeepSeek, I think what China demonstrated is that it was close enough. If China didn’t develop AI in the next five years, then it would indicate it’s really behind. DeepSeek was able to be developed within two or three years. That suggests to people that if the US has sanctions, if there’s a lead, the lead time is probably closer to three years instead of ten years, as many people originally thought it was.
Rivas: How will the tariffs recently imposed by Donald Trump on China impact the Chinese economy?
Ren: It’s definitely negative, because China does rely on exports. On the other hand, if you remember, during the first trade war, China was able to continue to export to counter some of those negative impacts. So yes, it is negative; on the other hand, because China is a producer, and it does have a skill economy and a lot of things like clothing, where even though some of it has been moved outside, China still retains much of it. I personally love fashion, but if you go into stores and you check some of the clothes that are usually made in China, these clothes are slightly on the higher price end. The reason is that China’s supply chain is still very resilient and if stores want a piece of really complex construction to be done, they prefer it be done in China, considering the quality. So yes, it has a negative impact. But China also has some resiliency in these trade tariffs.
Niemiec: In terms of resilience, there have been a couple news sources reporting retaliatory tariffs that could be imposed on the US. What is your opinion on those? Do you think that was a good move?
Ren: A lot of these retaliations are mostly for the media. The Chinese government also has local public pressure, right? If it doesn’t do anything, it will be perceived as weak. They do have pressure to come up with something. But if you actually look at what China came out with, the retaliatory measures, it’s very low-skill, very targeted. The impact is nothing like a counter. So I will say those are mostly for China to do something to show that it is willing to fight back a little. But it’s not yet completely a trade war. China still hopes to navigate this to come up with some understanding with the US while also trying to open up a market for Chinese goods outside the US. Chinese exports to the US are still a huge part of its economy, but China is also trying to sell to other countries. I think there it goes back to the US being the ultimate buyer. The US has a lot of leverage, but I think the main purpose of China’s retaliations is about doing something, about communicating to the local public that we are going to do something, but the actual retaliation is very limited.
Rivas: What sectors of the economic market in China do you believe have the most promise for long-term growth and why?
Ren: So a lot of times investment is different from extra growth. I will say in China, high-end manufacturing will continue to grow, because it is now not just for economic growth, it’s also a government countermeasure against the US. But that does not necessarily mean that if you just buy stocks in high end manufacturing, you need to be able to sell to expand the market outside. I would say the areas that will see more growth are more manufacturing-related, more technology-related. This is mainly because they are also going to get more government-oriented money. The other area of growth is probably Chinese domestic brands. For many Chinese locals, luxury brands used to be very dominated by Western businesses like Louis Vuitton. Because China’s economy is not in a good condition, not as positive as before, a lot of Chinese consumers want high quality products but also cheaper prices. Chinese brands are trying to develop a lot within the higher luxury space. Chinese luxury brands don’t have the name recognition of other top brand names, but they domestically are able to offer good value and high quality clothing. A lot of these domestic brands and branded goods are likely to grow in popularity. Before, you didn’t hear about Chinese brands because manufacturers usually sell for American brands, but now, because the US wants to decouple, these Chinese manufacturers need to find something and they found having a brand actually helps the profitability. I think we will see a rise of these Chinese brand activities.
Rivas: Billionaires and people of wealth are having an increasing impact on politics. Do you think such individuals will affect relations between the US and other countries, including China?
Ren: That’s very interesting. We are in uncharted history here. I tried to go back and read history, but honestly, I wasn’t able to find anything. During the Cold War, there were American entrepreneurs who also had business interests in the Soviet Union, but the Soviet economy was never as tapped globally as China’s is now. It really is an uncharted history. That’s the way I’m seeing it. China right now doesn’t need the foreign direct investment, but I don’t think they will go against these entrepreneurs. Actually, China is very welcoming of companies like Tesla. Sometimes they do a little bit of limiting, for example preventing Tesla cars from going into government compounds. Even that comes and goes, and now they say they don’t do that anymore. Tesla’s self-driving software is now being tested in China. The US is not allowing Chinese workers to come to prevent a “sphere of spying”. yet China is still allowing Tesla to be a self-driving system. I think on these issues, China probably will use them as a way to show that China doesn’t want to decouple as much. I think the pressure will be coming more from the US side. If the US public feels that Elon Musk’s business is impacting his judgment, the public opinion in the US will probably shift first. I think generally China is courting these entrepreneurs instead of doing negative things to them. They prefer American firms to come and invest.
Niemiec: For clarification, would you say that foreign investment in China is mostly private investors or international investors that invest in Chinese equities?
Ren: If it’s a strategy listed in the US, then it’s still mostly US investors, even though people have been—before the recent run—much more negative on those. One of the panelists mentioned China as uninvestable. I personally think it’s investable. It’s just that it has a lot of risks. If it’s a strategy outside, it’s still the US public and the US institutions. I think pension funds are now going to leave China due to the political pressure. The state pension fund, especially in the more conservative states, is probably going to be the first mover. But if the relationship deteriorates, any investor or pension funds can be subject to scrutiny. I think we have not gone to that end yet. In direct investment, it’s definitely American firms. I think American firms, if you see banks and pharmaceutical firms, have reduced their investment significantly. Foreign direct investment in China has really gone down significantly, but companies like Tesla are still investing in China.
Image courtesy of WisdomTree