Growth Dragons Weekly: China's Economic Data Good or Bad? It Depends on the Eye of the Beholder
Here’s what happened in Growth Dragons this week:
China's Economic Data: Good or Bad? It Depends on the Eye of the Beholder
BOE Advances Foldable Screen Technology
Semiconductor Equipment Manufacturer Naura Records 50% Growth in 2023
Tencent Plans to Leverage Douyin's Audience for Livestreaming Its Games
CATL Expands into Beijing and Introduces a 10-Minute Charging Battery
#1 China's Economic Data: Good or Bad? It Depends on the Eye of the Beholder
With the release of China's economic data on Wednesday, the CSI 300 Index experienced a nearly 2% drop. Why do investors react so strongly to China's data?
The answer hinges on whether one adopts a "half-cup empty" or "half-cup full" perspective
.
Let's examine the "half-cup-empty" viewpoint first.
China’s GDP growth, at 5.2%, surpassed its own target but fell short of the estimated 5.3%. Pessimists might dwell on this 0.1% shortfall, with some even questioning the authenticity of the data.
There are additional concerns. China's retail sales growth decelerated to 7.4% in December, down from 10.1% the previous month.
Property investment plunged further to 9.6% for the entirety of 2023.
The Chinese population decreased for the second consecutive year in 2023 – the mainland population declined by 2.08 million to 1.4097 billion, from 1.4118 billion in 2022.
The unemployment rate among the 16-24 age group reached a record 21.3% in June 2023, stabilizing at 14.9% in December, according to the National Bureau of Statistics.
Chinese Premier Li Qiang downplayed the likelihood of significant stimulus at the World Economic Forum, dampening the hopes of business leaders and investors.
Contrary to market expectations, the People's Bank of China (PBOC) refrained from lowering interest rates.
Conversely, from a "half-cup-full" perspective, a 5.2% growth rate is respectable for a nation of China's size, especially given its troubled real estate market and recovery from the COVID recession.
While retail sales growth in China is slowing, it continues to rise.
The property crisis is unlikely to be resolved swiftly and could take years. An abrupt improvement in these figures is unrealistic.
The declining population presents challenges, but technology and artificial intelligence are expected to bridge this gap and enhance productivity. The loss of factory workers could be offset by automation.
The high unemployment rate among youth reflects China's economic restructuring. Today's younger generation is more educated and less inclined towards factory work compared to their parents. With more degree holders and a lag in job creation, especially in the service sector, such a transition will naturally take time.
China is burdened with substantial local government debt. The current property crisis stems from debt-funded growth. The government's hesitation to introduce substantial stimulus is a strategy to avoid exacerbating the debt issue. Li Qiang emphasized China’s focus on sustainable growth without accruing long-term risks.
The PBOC's decision not to cut interest rates is a move to prevent further weakening of the yuan. A weaker currency could deter foreign investment and exacerbate the debt burden of property developers with USD-denominated loans.
China faces its challenges head-on, albeit within certain constraints. It is implementing measures aimed at securing the best long-term outcomes.
Ultimately, everyone is entitled to their perspective. Our stance is to adopt the "half-cup-full" view.
#2 BOE Advances Foldable Screen Technology
Keep reading with a 7-day free trial
Subscribe to Growth Dragons to keep reading this post and get 7 days of free access to the full post archives.