A resolution to the trade war, coupled with economic stimulus, could signal a turning point for China investors
At face value, underlying weakness in the Chinese economy hardly makes it an optimal time to be investing in this market. However, with so many dynamics at play, figuring out the likely length and depth of the Chinese slump and how to protect your portfolio or capitalise on new opportunities is a serious challenge.
For starters, the lower earnings of global brands such as Caterpillar, Nvidia and Apple (which recorded a 27% drop in fourth-quarter gadget sales) are directly linked to the severity of the slowdown in what is now the world’s second largest economy after the US.
Official data suggests China’s GDP growth (at 6.8%) is at its lowest level in 30 years. Admittedly, this is a lot stronger than that of most major economies. But independent reports suggest China’s growth could be as low as 5%, with the government keen to mask how much the economy has fallen. A direct casualty of China’s slowdown, the benchmark Shanghai Composite was the world’s worst-performing major stockmarket last year.
Much of the country’s slowdown, with its global knock-on effect, is being attributed to China’s middle-class shoppers simply spending less amid fears that the situation may get worse. China’s reliance on consumer spending can’t be understated, with consumption contributing 76% of the country’s economic growth, according to the latest figures. Julian Evans-Pritchard, a Singapore-based China expert at Capital Economics, estimates that consumer spending in China’s big urban areas contracted by around 3% last year.
With China’s economy looking overly burdened by debt, one key sector to feel the pinch is the mammoth car market, which shrank in 2018 for the first time in almost 20 years. Then there are concerning retail sales, which over the lunar new year holiday grew at their slowest pace in a decade.
This story is from the April 2019 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the April 2019 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.