The Chinese Economy: Ignore The (Foreign) Bears – May 13, 2024

A just published report noted that the recent rally in Chinese stocks has lacked improving forward earnings. The good news for stock bulls is that this divergence is not expected to persist.

We expect earnings momentum to improve over the balance of the year, in line with solid economic momentum. Chinese economic growth will remain in line with its underlying trend despite the lack of policy stimulus and the obvious drag from the ongoing housing recession. The economy is benefitting from solid consumption growth together with a brightening outlook for its export sector.

Net: despite the perennial bearishness of foreign analysts, real GDP growth is running at its underlying trend of 4.5-5%, a pace we expect to persist for the rest of 2024.


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