HONG KONG (Reuters) – Focusing on domestic consumers would be a “better choice” for many Chinese companies, even if the shift is forced by trade tariffs and weak worldwide growth, said Thomas Kwan, chief investment officer at Harvest Global Investments. The U.S.-China trade war morphed into a broader conflict over the summer as Washington blacklisted some of China’s top technology companies. While the two sides are closing in on an initial trade deal, there are still many issues to resolve. Even without the impact of tariffs, demand for Chinese exports had already been slowing in line with global growth, but that need not be bad news for the country’s companies, Kwan said at the Reuters 2020 Investment Outlook Summit. “It’s lucky that in China we have a large domestic market… Leveraging the domestic opportunities may be a better choice for many companies,” he said. With urbanization still underway and income growth benign, Kwan said sectors from education to healthcare would continue to perform. Kwan heads up investment strategy in the offshore unit of Harvest Fund Management, one of China’s earliest asset managers with close to a trillion renminbi ($142.95 billion) under management at the end of 2018, according to its website. In Hong Kong, where Kwan is based and anti-government protests have been under way for five months, a calming of tensions would afford Chinese companies listed in the city .HSCE some room to rebound in the near term, he said. GOING LOW As concerns over a global recession dissipate, the U.S. Federal Reserve has signaled an end to interest rate cuts, with global government bond yields soaring as investors dump low-risk safe-haven assets. Benchmark 10-year U.S. Treasuries US10YT=RR were yielding 1.82% on Tuesday after touching 1.43% in September. Chinese 10-year yields have climbed as much as 36 basis points since September from their lowest level since 2016. But beyond a short-term bounce, factors such as lacklustre economic growth in developed markets and shrinking population growth will keep rates lower for longer, said Kwan. “Even in China, we are actually expecting the population to start to decline in 10 years’ time… So it’s difficult to envision we’re actually at the end of falling bond yields,” he said. “Over the next five years, we can easily see 10-year bond yields in China drop to the 2% to 3% range.” The yield has by and large been in a 3-4% range over the last three years.