China’s raft of new measures to bolster its economy strengthens the case for global investors’ continued attraction to the country, says the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The bullish analysis from Nigel Green of deVere Group comes as China’s economic planning agency announced on Monday a series of measures to encourage investment.
Beijing’s series of policies is ahead of a key Politburo meeting this week, which will review China’s first-half economic performance.
In the 17-point statement, the National Development and Reform Commission vowed to lure more private capital to become involved in the construction of important national projects and major industrial supply chain ventures.
The moves come after last Thursday’s announcement from the People’s Bank of China and the State Administration of Foreign Exchange to confirm that they have modified their cross-border financing rules to allow companies to borrow more from international investors.
Nigel Green says: “Will these measures work? Yes, because they strengthen the case for global investors’ recently renewed enthusiasm for China – which is robust, despite the economic red flags.
“Weaker international demand, which has triggered the drop in exports, comes at a time when the economy is under pressure from a weak property sector and a disappointingly slow Covid rebound after controls were dropped at the start of the year. In addition, youth unemployment is at its highest level on record.
“But despite these challenges, it remains an appealing destination for investors.”
One of the most compelling reasons why investors are attracted to China is its massive market potential.
“With a population of over 1.4 billion people and a growing middle class, China offers a vast consumer base for businesses to tap into. The rising incomes and increasing urbanisation have fuelled demand for various products and services, providing ample opportunities for investors across sectors such as technology, healthcare, and consumer goods,” says the deVere CEO.
The People’s Republic also has a proven ability to navigate and adapt to economic challenges. “Despite recent headwinds, including trade tensions and the pandemic, China has shown remarkable resilience.”
The country’s emphasis on research and development, coupled with significant investments in emerging technologies like artificial intelligence, 5G, and biotechnology, has propelled China to the forefront of technological advancements, affirms Nigel Green.
He notes: “Investors recognise this immense potential in these sectors and are eager to capitalise on the nation’s technological prowess, which offers unique opportunities for high returns on investment.”
Investors are also fully aware of China’s economic model, which is gradually shifting from export-driven growth to one fuelled by domestic consumption. This transition presents investors with a new set of opportunities as the Chinese population becomes increasingly affluent and consumption-oriented.
Companies that cater to the evolving tastes and preferences of Chinese consumers stand to benefit immensely from this paradigm shift, prompting investors to focus on sectors such as e-commerce, entertainment, and luxury goods.
Nigel Green concludes: “Beijing’s proactive policies, such as stimulus measures and targeted reforms, have effectively supported economic growth and stabilised market conditions in the past, and we expect the new measures will do the same. This track record instils confidence in global investors, as they believe that China can effectively address and overcome future obstacles.
“The new policies will further help investors see beyond the short-term and look for the long-term potential in China.”