A Study on China’s Economic Cycle Classification and Asset Allocation Based on the Investment Clock Theory (2008–2024)

Abstract

This paper employs the Investment Clock Theory to evaluate China's economic cycles from 2008 to 2024 and examines the performance of four major asset classes—stocks, bonds, gold, and real estate—across different phases of the cycle. Drawing upon both literature review and empirical data analysis, the study categorizes China's macroeconomic fluctuations into four classic stages: Expansion, Recovery, Stagflation, and Recession. Each stage is associated with distinct patterns of asset rotation, which the paper identifies and quantifies through statistical methods. The results show that asset class behavior in China follows a discernible cyclical trend, aligning closely with the investment clock model, and provides valuable insights for macro-based asset allocation. By extending the investment clock framework to an emerging market context, our research not only enhances the theoretical understanding of asset allocation over business cycles but also offers practical implications for institutional investors seeking to optimize portfolio strategies in response to economic fluctuations.