China’s Stock Markets In Shock Growth
China was the only major economy to grow in 2020, despite the impact of the coronavirus pandemic. Although economic growth was at the slowest rate for forty years, China still managed to grow by 2.3% GDP overall, helped by a growth of 6.5% in the final three months to boost the overall average.
Mainland and Hong Kong share markets reported gains that exceeded expectations of economists worldwide, with the CSI closing at 1.1% higher today and Shanghai Composite at 0.91%.
There are suggestions that the momentum is only set to continue as the market returns to normal.
Pandemic Recovery
Though the pandemic was a significant economic blow across the world, and particularly in China where it originated (with an eye-watering market loss of 6.8%).
Strict containment measures and heavy investment in business relief has helped China recover without repetition of lockdowns, and the Chinese economy is expected to overtake the US by 2028, according to the Centre for Economics and Business Research.
Recent research has suggested that the Chinese economy is likely to see annual growth of almost 6% annually until 2025, and 4.5% until 2030.
This unique growth is fuelled not only by careful management of the Covid-19 pandemic, but also by targeted policies which boost industries such as advanced manufacturing.
The worldwide demand for Chinese goods has kept the export market thriving, even during such challenging times.
Challenges
However, there are still challenges ahead for China. Though the incoming US administration is likely to be friendlier to China than President Trump, the trade relationship is still fraught with politically-charged difficulty.
In addition, while the pandemic is under control within China, the continued effect of the virus elsewhere and the travel, tourism and hospitality restrictions it causes does remain a concern.
The surprisingly positive Chinese forecast has also failed to inspire excitement in European markets, with the Stoxx 600 staying flat and the FTSE 100 getting off to a slow start, and has also failed to lift stocks in the rest of Asia.