China’s Economy Faces a Promising But Challenging Road to Recovery
In the past three years of the global pandemic, China has withstood the impact of the COVID-19 disruption to the economy. At the same time, it is facing multiple risks such as the reshaping of the world supply chain, energy and food crises, and the economy is struggling to move forward amidst uncertainties. At present, China’s economy is still facing many difficulties.
With the optimization of epidemic prevention and control measures, China’s economy has shown signs of a faster and stronger rebound in growth. Many people in the industry believe that the global economy is likely to fall into recession in 2023, and weakening exports will become an important unfavorable factor impacting the country’s economy. Therefore, the focus of economic policy in 2023 needs to be on expanding domestic demand. As the economy recovers, the worries, anxieties and disappointments about the growth outlook that have plagued people for a long time will gradually dissipate.
China as Home to Many Unicorn Companies is Creating More of Them
In the capital market, an unlisted start-up with a valuation of more than US$1 billion is called a “unicorn” company. The number of unicorn companies reflects the innovation vitality and financial strength of the market. In the past few years, almost all global unicorns came from China and the United States. Most of the existing leading unicorn companies in China were established around 2012. In the past decade, China has been the birthplace of many major unicorn companies. Several conditions are required to spawn a large number of unicorn companies, and the Internet is undoubtedly the industry that has produced the most unicorns in the past 10 years.
Last decade, the Internet industry and platform companies have been very eye-catching. But in 2022, things have changed. China’s future unicorns are expected to come from broader fields beyond the Internet. In the long run, the manufacturing industry is an area of strength in China, and there may be a large number of good companies rising in this sector.
Hong Kong Stocks Rebound amid Global Recession
Hong Kong stocks began to rebound strongly under the favorable factors such as the domestic epidemic prevention policy shift, improvement of investors’ sentiment, and the Fed’s eased interest rate hike pressure. In this round of bull market of Hong Kong, Internet, pharmaceutical, and real estate stocks performed particularly well. In more than two months, the Hang Seng Index achieved a reversal. From the end of October 2022 to January 11, 2023, the Hang Seng Index rose 46%, hitting a new high in the second half of the year; the Hang Seng TECH Index rose 62%; the Hang Seng China Enterprises Index rebounded 48% from its low point. As a major global exchange, this is a rare rebound.
If compared with the global capital market, Hong Kong stocks have led the world in gains in the past two months. After experiencing a sharp rebound, the Hong Kong stock market in 2023 is likely to continue to lead the world. Looking ahead to 2023, the biggest driver for Hong Kong stocks will be China’s economic restart following the end of the COVID-19 pandemic.
Competition Heating up in China’s EV Market
2022 is an unforgettable year. Despite the impact of events such as the Russia-Ukraine conflict, the COVID-19 pandemic and chip shortages, China’s auto industry still shows strong resilience and vitality. In the field of global new energy vehicles, the sales volume in China accounts for 40% of the world, the United States accounts for 30%, and the sum of European countries accounts for about 20%.
Behind the excellent sales figures, there are still harsh realities. Some industry practitioners said that new energy vehicles will continue to grow in 2023, but the growth rate will slow down sharply, and the general growth rate will drop from 100% to about 30%. After two years of rapid development, the sales growth rate of new energy vehicles will slow down significantly in 2023; to occupy a favorable position in the increasingly fierce market competition, auto makers need to increase investment in research and development, supply chain and other aspects.