The second day at the World Economic Forum meeting in Davos launched with remarks from Li Qiang , China’s premier and second-in-line after Xi Jinping , who said that the Chinese economy is equipped to manage fluctuations in its performance and emphasized that the general trajectory of its long-term growth remains unaltered.
Li is among the highest-ranking world leaders addressing the global audience at the Swiss mountain resort where the event is taking place.
The topliner’s speech came as the world faces several complexities, including two major military conflicts in Europe and the Middle East, as well as the looming threat of a global recession .
Just hours before Ukraine President Volodymyr Zelenskyy called for more robust sanctions on Russia and EU chief Ursula von der Leyen endorsed the need to rebuild global trust, Li gave a speech underlining China’s growth amid investor concerns over the country’s economic stagnation.
The speech’s centerpiece was an early reveal of China’s GDP growth for 2023, which he said came in at “around 5.2%” beating the country’s target of 5%, and coming in before the official figures are released on Wednesday.
However, trading action around U.S.-listed ETFs which follow the Chinese market showed that investors were not impressed with the figure.
The iShares MSCI China ETF MCHI dropped 2.5% on Tuesday at the time of this writing, while the KraneShares CSI China Internet ETF KWEB fell by over 3.5%.
Both ETFs are down more than 28% in the past year.
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Earlier this month, Chinese assets felt the shock after data from the country’s fragile real estate sector revealed that home sales by the end of December were 26% lower than the previous year, with a weakening market from both the supply and demand sides.
Data from the country’s production manager index also showed that manufacturing is suffering, taking down the Yuan with it.
A poll conducted by Reuters of 58 economists puts the country’s projections for GDP growth in 2024 below 4.6%, with similar numbers in 2025, suggesting that China will continue to struggle with its post-COVID recovery.
If those projections are realized, hope for a strengthening Chinese economy will fade, contradicting bullish narratives.
The 5.2% growth rate in 2023 was a big improvement from 2022’s growth of 3%, but may concern investors if the numbers fail to continue their growth trajectory.
Current numbers are poor when compared to the country’s growth in the period ranging from 1992 to 2019, when every year GDP grew between 6% and 14%.
Yet Li reassured world leaders at Davos that “the Chinese economy can handle ups and downs in its performance” and that “the overall trend of long-term performance will not change.” Li emphasized that the country’s middle class continues to maintain the strength needed to support economic growth, proven by the fact that China was able to bounce back from the pandemic without the need to issue major stimulus checks.
He touted that the country’s middle class is expected to double in the next 10years, leading to an 800-million strong domestic consumer base.
In spite of mounting tensions with the West and moves towards “economic decoupling” from the EU and the U.S., Li said that China continues to maintain an open stance towards global business.
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