Foreign investors go cold on China
At the start of 2023, analysts sized China and liked what they saw: an economy reopening after three years of Covid isolation, and ready once again to roar. Nothing of the sort has happened and corporates and institutional investors are now fleeing the market in droves.
Arguably, nothing has gone right for China in 2023.
The year began in hopeful mood. After three years of pandemic-related isolation and a messy exit from president Xi Jinping’s zero-Covid policy, this was supposed to be a comeback year for Asia’s largest economy.
Nothing of the sort has happened. China’s year has marched to a steady drumbeat of escalating crises and disappointing data.
In effect, global investors are saying to China: ‘We’re just not that into you.’
Retail sales growth hovers in the mid single-digit range (monthly consumer spending rose at an average annualised rate of 4.7% in the five months to the end of October, according to the national bureau of statistics). Most analysts at the start of 2023 projected double-digit growth.
The property sector is increasingly beleaguered. If anything, its predicament is growing more, not less, precarious. Property sales fell 7.8% year on year in the first 10 months of the year, against a 7.5% decline in the first three quarters. Efforts to mitigate the slide by cutting borrowing costs and relaxing restrictions on home ownership have fallen flat.