While China’s ailing stock markets have regained some ground in the past couple of sessions, thanks to pledges and rhetoric that market losses will be addressed, there are more fundamental risks at play that equities could continue their downward spiral throughout 2024.
Primary among these is economic growth. Without growth, corporate profits decline, unemployment rises and consumers stop spending.
And the outlook doesn’t look good according to analysts at the Asia Society Policy Institute (ASPI), a New York City-headquartered think tank.
Economy Continues To Struggle Post Covid-19
Foremost, says analyst Nathan Levine, is China’s economy will continue to struggle, having failed to fully bounce back following a series of punishing COVID-19 lockdowns.
“China’s economy faces deep structural problems and is increasingly running into the limits of its current growth model,” says Levine.
For decades, he adds, China relied on investment-led growth as it showered infrastructure, real estate and manufacturing sectors with cash, while consumers maintained high rates of savings. That was OK, as China exported its finished goods to hungry consumers …