China is set to regain its allure for global investors in 2024 despite ongoing economic concerns, predicts financial advisory firm deVere Group founder and chief executive officer Nigel Green.
Green's optimistic outlook follows Beijing’s additional financial support for the country’s beleaguered property market and developers, including hard-hit Country Garden, announced yesterday.
Shenzhen, China’s main industrial hub, has also unveiled new homebuying measures to further support the sector critical to China's economy.
China’s wellbeing matters
“The marked slowdown of the world’s second-largest economy, home to 1.4 billion people, has been a huge international narrative for the last two years,” Green said.
“China’s share of the global economy has dropped by 1.4% in this period – the largest drop since the 1960s.
“This matters for not only China but the rest of the world as it’s the largest trading partner of 140 countries and regions globally.”
Renewed commitment
China's property market, a crucial economic driver, has been a significant cause for investor apprehension.
Green highlights the government's recent supportive measures, including liquidity injections and targeted reforms, as signs of renewed commitment to market stability.
These actions, coupled with China's transition towards a consumption-driven economy, are expected to boost investor confidence.
Middle class to the rescue
“Investors, including multinationals, have shunned the world’s second-largest economy in the last couple of years, but this could change again as the fundamentals come back into focus,” Green said.
“China is transitioning from an export economy to a consumption one that, ultimately, will be more sustainable."
The country’s burgeoning middle class, which Green projects will become the world's largest consumption market in the next decade, presents a vast untapped opportunity.
Additionally, its ascent up the value chain, marked by the acquisition of foreign brands and technologies, will further enhances its attraction to global investors.
Economic tailwinds
Green notes there is enormous potential for infrastructure growth in China as its urbanisation strategy is still in its infancy.
“Plus, the reform of state-owned companies could blow apart monopolies and create major investment opportunities.”
Its leadership in sectors like clean energy, electric vehicles, and industrial robots - all integral to the fourth industrial revolution - positions it as a frontrunner among investors.
Additionally, China’s debt-to-GDP ratio, at 110%, compares favourably against Japan and the US, which stands at around 260% and 120%, respectively.
“China continues to face serious challenges, but the economic woes are starting to look less stark than they have over the last two years as Beijing appears to be increasingly proactive on the essential property sector.
“This is likely to draw the attention of investors in 2024,” Green added.