China: A Controlled Rebound

The Return of Consumer Confidence

The Chinese government is now focusing on stimulating consumption rather than relying on debt. Beijing has launched a series of targeted measures: birth rate subsidies, housing assistance, tax breaks for middle-income households, subsidized loans for small and medium-sized enterprises (SMEs), and reduced-rate loans for young professionals. The goal is to encourage households to spend their considerable savings, which the People's Bank of China estimates to be over $9 trillion.

The results are starting to show. Retail sales have increased by 6.2% year-on-year, private investment is making a modest recovery (+2.8%), and urban unemployment has decreased to 4.8%. Financial markets are following this trend: the electric mobility, consumer goods, and domestic technology sectors (semiconductors, artificial intelligence, batteries) are the main beneficiaries. « China has learned from its mistakes, » says Christian Floro, market strategist at Principal AM. « The rebound is no longer driven by infrastructure construction or public debt, but by household confidence and the strength of local businesses. This is a quality-driven recovery, not one focused on quantity."

Slower Growth, but More Stable

The authorities have clearly moved away from the model of double-digit growth. China's new trajectory is based on a growth rate of 4 to 5% per year, considered « sustainable and inclusive. » For Beijing, the priority is twofold: stabilize the financial system and reduce territorial inequalities.

The real estate sector, which long served as a growth engine, is still recovering: new home sales are down by 6%, and major companies in the sector like Country Garden and Evergrande continue to restructure. However, the government is supporting the transition by facilitating the refinancing of unfinished projects and backing regional banks.

This pragmatic approach reassures investors. Major international managers, from Fidelity to BlackRock, are gradually returning to Chinese stocks. They welcome a « macroeconomic normalization » where the People's Bank of China prioritizes monetary stability at all costs.

Slower Growth, but More Stable

The political message is clear: China wants to demonstrate that it can grow without overheating. « The credibility of the Chinese model now relies on its ability to provide visibility, » highlights Floro. « The stock market is once again becoming a tool for confidence, not speculation."

For international investors, this transformation presents new opportunities: a massive domestic market, still attractive valuations, and a relatively stable currency.