Several key data points appear to indicate China’s economic recovery, following an extended bout of COVID-induced lockdowns, has taken hold. Chinese PMIs are suddenly surging, and residential sales figures have just rebounded for the first time in more than a year and a half. It will be a while before China’s real estate and property markets can truly begin to recover, but stabilizing this critical portion of the world’s second-largest economy is critical in reviving its growth potential.
Some are becoming more optimistic about China’s annual GDP target for 2023, which will be outlined during the upcoming summit of the country’s National People’s Congress (NPC), set to kick off this weekend. Reports indicate the target could be as high as 6.0%, which would double last year’s paltry rate of growth.
Related ETFs: iShares MSCI China ETF (MCHI), Global X MSCI China Real Estate ETF (CHIR), Global X MSCI China Financials ETF (CHIX), Global X MSCI China Industrials ETF (CHII), Invesco China Technology ETF (CQQQ)
China’s economic emergence from their Zero-COVID lockdowns is showing early signs that it may be more robust than many had expected. For the month of February, the country’s manufacturing purchasing managers’ index (PMI) unexpectedly surged to 52.6, up from just 50.1 in the prior month. February’s PMI reading marked the strongest level of factory activity since April 2012 as new export orders rose for the first time since mid-2021. If such an acceleration in Chinese industrial capacity holds, it will carry significant implications for domestic growth, as well as material and energy commodity prices across the board.
Services also showed a strong pace of expansion in February as the non-manufacturing PMI jumped to a 23-month high of 56.3, up from 54.4 in January. The non-manufacturing PMI contains construction sector activity, which led the increase in the broader index at 60.2. Coinciding with that resurgence in construction, the beleaguered Chinese real estate market may have started to turn a corner last month, as the value of new home sales by the 100 biggest real estate developers climbed 14.9% YoY in February, reaching 461.6 billion yuan ($67 billion). That marked the first gain in sales across 20 months going back to June 2021.
MRP has covered the many months of incentives and stimulus measures it took to get this first signal of recovery, but it is nonetheless meaningful for property developers who are desperate for cash flow to…
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