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Illustration: Lazaro Gamio/Axios

While U.S. trade negotiators continue to push for a trade deal with China that includes "significant structural changes" to its economic model, investors are putting the trade war behind them, pushing forward into Chinese assets and being rewarded handsomely.

Why it matters: A growing chorus of investors don't see this as a short-term theme, but the beginning of a new cycle where the growth dynamics in countries like China, India and others in Asia, Africa and Latin America drive not just the lion's share of the world's gross domestic product but also its market performance.

What they're saying: "Going forward, I see the U.S. getting something like 4% or 5% annual returns, while EM returns 8% or 9%," Lance Humphrey, a portfolio manager on USAA's global multi-asset team, tells Axios.

  • China, specifically, is making major strides in refining its economy, but not because of the trade war.
  • Onshore Chinese A shares have nearly doubled the performance of the S&P 500 so far this year, rising more than 21%.

The big picture: Exports as a percentage of Chinese GDP have already shrunk from 36% in 2008 to just 18% today, says Henry McVey, head of global macro and asset allocation at investment firm KKR. And the Chinese economy is still growing at a 6% clip, turning to services and other domestic industries.

  • "Maybe more importantly, we believe that exports as a percentage of GDP could be headed into the low double digit range or below that of the U.S. over the next five to seven years — almost irrespective of which way the trade negotiations turn out."
  • "China made a conscious decision to internalize much of its end demand following the Global Financial Crisis — long before the election of President Donald J. Trump."

And that's just the tip of the iceberg, say global strategists at Wells Fargo Investment Institute (WFII). They expect to see Chinese urbanization rise towards 80%, moving some 400 million people from rural to urban areas, and buffeting an already growing middle class.

  • Further, they say, 9 of 11 economic sectors in China should generate faster corporate earnings growth than their counterparts in the U.S. over the next 3 to 5 years. The two that aren't — energy and oil production and technology. (As we wrote yesterday, China is far outpacing the U.S. in renewable energy investment.)
  • "In a way, Chinese equities right now are trading at a substantial discount," said WFII's Head of Global Equity Strategy Audrey Kaplan during a call with investors. "China, along with several other emerging economies, their forward growth path looks much more robust than here in the U.S."

Go deeper: China even stiffs tariff-free U.S. goods during Trump trade war

Go deeper

Scoop: Gina Haspel almost resigned over plan to install Kash Patel as CIA deputy

Photo: Win McNamee/Getty Images

CIA Director Gina Haspel almost resigned in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelations stunned national security officials and almost blew up the leadership of the world's most powerful spy agency.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus deaths reach 4,000 per day as hospitals remain in crisis mode — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden says, "We will manage the hell out of" vaccine distribution — Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan — Widow of GOP congressman-elect who died of COVID-19 will run to fill his seat.
  3. Vaccine: Battling Black mistrust of the vaccines"Pharmacy deserts" could become vaccine deserts — Instacart to give $25 to shoppers who get vaccine.
  4. Economy: Unemployment filings explode againFed chair: No interest rate hike coming any time soon —  Inflation rose more than expected in December.
  5. World: WHO team arrives in China to investigate pandemic origins.

NRA declares bankruptcy, says it will reincorporate in Texas

Wayne LaPierre of the National Rifle Association (NRA) speaks during CPAC in 2016. Photo: Saul Loeb/AFP via Getty Images

The National Rifle Association said Friday it has filed for Chapter 11 bankruptcy and will seek to reincorporate in Texas, calling New York, where it is currently registered, a "toxic political environment."

The big picture: The move comes just months after New York Attorney General Letitia James filed a lawsuit to dissolve the NRA, alleging the group committed fraud by diverting roughly $64 million in charitable donations over three years to support reckless spending by its executives.