China is still facing economic challenges in late 2024, including property problems and sluggish growth. The country has been impacted by lockdowns since 2020, resulting in weaker GDP, a struggling stock market, and high unemployment rates. However, not all market thinkers share a negative view of China’s future. Some experts, such as BML Funds CIO Ted Alexander, believe there is still potential for innovation and growth in China. Billionaire investors like David Tepper and Michael Burry are also maintaining their investments in Chinese companies, indicating confidence in the market’s long-term prospects.
Despite some bullish sentiments, there are also bearish views on China among Wall Street analysts. Goldman Sachs recently exited its long-term position on copper and reduced its price forecast for 2025 due to softening Chinese demand. Bank of America has also lowered its growth forecast for China this year to 4.8%. However, there is some positive economic data to consider. Retail sales in Beijing have been increasing, with a 2.7% rise in July compared to the previous year. This marked the 18th consecutive month of expansion in retail trade, suggesting some signs of resilience in the consumer sector.
China’s tourism industry has also seen growth this summer, with around 872 million passenger trips tracked during the season, a 6.2% increase from the previous year. Beijing expects air travel to reach record levels in 2024, with projections exceeding the 619.6 million passenger trips seen in 2023. Key drivers of this growth include the Lunar New Year holidays, the Paris Olympic Games, and demand for flights between China and other countries. Eric Lin, head of Greater China Research at UBS, noted that Chinese corporates have reported solid earnings, providing support for Chinese stocks in the short term.
Amid the mixed views on China’s economic outlook, there is optimism about the potential for growth and innovation in the country. Some market analysts believe that there are still opportunities for investors to benefit from exposure to Chinese companies. By maintaining investments in Chinese tech giants like Alibaba, JD.com, and Baidu, key players in the market like David Tepper and Michael Burry are indicating their confidence in the long-term success of these firms. With upbeat retail sales and tourism data, as well as positive earnings reports from Chinese corporates, there are indications that China’s economy may be positioning for a recovery in the near future.
While challenges persist, such as softening demand for commodities like copper, there are also bright spots in China’s economic landscape. Retail sales growth, rising tourism numbers, and solid corporate earnings are all contributing to a sense of cautious optimism about China’s future prospects. With some market analysts predicting a potential upside for Chinese stocks in the remaining months of 2024, investors are closely watching developments in the country and assessing the opportunities and risks associated with investing in China’s evolving economy.
