David Prosser: Bolton's faith in Chinese consumers points to the future of global economy

Outlook It may annoy those who enjoy seeing the stars being brought down to earth with a bump, but Anthony Bolton is up to his usual form with his new investment venture, Fidelity China Special Situations. The investment trust, launched shortly after Fidelity's veteran stock-picker relocated to Hong Kong in March, posted a return of 7.7 per cent during its first six months – more than five times the 1.4 per cent gain that the Chinese equity market as a whole has managed.

What's interesting is how Mr Bolton has pulled off the trick – and what it says about the development of the Chinese economy. Broadly speaking, the fund is focused on companies with exposure to the domestic market, particularly in consumer-facing industries such as retail and leisure. That reflects the manager's desire to benefit from a shift that always takes place as emerging markets develop: the move from being a low-cost,export-driven manufacturer to a more broadly-based economy where rising wealth powers domestic consumption.

The performance of Mr Bolton's fund suggests this shift is happening faster in China than many analysts had expected. The consumer-facing business in which he has invested have, in the past six months at least, performed much more strongly than the exporters with which most of us in the West still associate China. In fact, says Mr Bolton, Chinese manufacturers are increasingly outsourcing work to other countries in the region, so quickly are their labour costs rising at home.

China, in other words, is moving from emerging to emerged at some rate of knots. Mr Bolton, as ever, was smart enough to anticipate this. The bigger picture is that the development of the Chinese economy in this way may soon begin to naturally smooth out the global imbalances about which there has been so much concern in recent times.