Stripping China from emerging markets is Wall Street's new craze

In financial centers such as London, New York, and Beijing, investors are increasingly deciding that China is too big and too different to be lumped with developing countries

As Grantham, Mayo, Van Otterloo & Co’s emerging-market team talked with one of their biggest clients in early 2021, a question arose: Would it be possible to take China out of an ­emerging-market stock portfolio?

It was an unusual query. Representing one-third of the MSCI Emerging Markets benchmark and half of the member companies, China is almost synonymous with emerging-market investing.

But it was an unusual time. The US-China relationship was at the lowest point since the Cold War. The trade war was still rumbling, Congress had passed a law threatening to kick hundreds of Chinese listings off the U.S. exchanges, and