Two days to draw the next chapter of China’s history. The regime that has been with an iron hand for more than twelve years Xi Jinping has exposed in recent hours its plans to end excessive competition at the beginning of the ‘two sessions’. The prime minister, Li Qiang, has named the situation through the second economy of the world: the Neijuan, or ‘involutive competition’, that is, a counterproductive cycle of excessive competence in which companies are being forced to invest increasing resources without generating proportional returns. Something that is not working.
China is at a time of excess chronic capacity with fierce price wars that affect a wide range of industries, including electric vehicles and solar energy. This has caused that now, several years after the resurgence of the sleepy dragon, Beijing is considering the need to address as soon as possible the Neijuan As the pressure of the West – especially of the US – is increasing the crisis over the Asian system.
“China will accelerate the establishment and improvement of fundamental institutional rules, eliminate local protectionism and market fragmentation, and eliminate bottlenecks at the entrance and exit of the market, as well as in the allocation of resources, “he said during his speech in front of the Popular National Assembly (APN) Premier Qiang before giving the figure that everyone was looking for, the annual economic growth objective of “about 5%”.
And that statement, among the rest of the speech, is what seems to have encouraged investors. The index MSCI China has revalued 2.7%the first increase that records since 2020 at the end of the first reflections session of the Popular National Assembly. “There is nothing to complain. Bloomberg.
“We will establish a mechanism to increase the financing of the industries of the future and encourage sectors such as biomanuffing, quantum technology, integrated artificial intelligence and 6G technology,” Qiang commented. This has caused Chinese semiconductor, computing and robotics actions to rise. The chips manufacturer Hua Hong semiconductor has won about 8% on the day in Hong Kong while Jiangsu Hengli Hydraulic It has signed a revaluation of 5.7% in Shanghai. With everything and with it, the CSI 300 index, a reference of the Chinese national market, has closed the day with a rise of just 0.5%.
For Julius Baër analysts, the market reaction to the words that have been heard this morning from Beijing “has been more positive” than expected, which “induces to anticipate that Positive feeling could be extended to non -technological sectorslike consumption. “For experts, the market has interpreted the speech of the Chinese prime minister as a reaffirmation of the policy of the Chinese regime.” We believe that the search for alternatives to the US could have further reinforced the flows towards Chinese actions, “they argue.
Although structural challenges persist, as the weak domestic demand and problems in the real estate sector, Economists of the Swiss investment firm believe that the authorities are providing sufficient political support to achieve their ambitious growth objectives.
And it is that despite the fact that optimism for the Chinese market contrasts with commercial tensions renewed by the US administration of Donald Trump with the imposition of 10% tariffs, in addition to those of 25% previously approved, investors emphasize that, unlike their most aggressive response in the 2018 conflict, this time China has opted for a more calculated reaction. “China has responded quickly but specificly, indicating that Beijing doesn’t look for a climb,” they explain.
In part, all these reasons explain that the Hang Seng has become the second most upward index globally so far this year with a gain of just over 2.8%, only exceeded by the German Dax that a revaluation of 3.5% to the heat of Rheinmetall, the car A cost wave of 500,000 million euros and that this cannot be stopped by the ‘debt brake’.
In contrast, the tariff policies approved in the last hours by Donald Trump and the incendiary speeches in favor of Russia and against the US historical allies such as the European Union, have led Wall Street to negative terrain in 2025 with accumulated falls for the S&P 500 of more than 1.2% or 1.5% in the case of Dow Jones.
In the currency market, Yuan Offshore It has lost 0.3% against the dollar while the yields of the 10 -year Chinese government bonds fell to 1.75%.
Weakness signals
The forecasts set forth, in any case with the reality of macroeconomic data that are not entirely indicative of a recovery. The China Ministry of Commerce revealed a few days ago that the direct foreign investment (FDI) in January more than 13% collapsed up to 13,460 million dollars confirming the bearish trend of recent months. IED contracted at the end of 2024 by 27.1% after doing the same in 8% for 2023, after eight consecutive years of growth.
And to this we must add consumer spending from the pandemic that has remained mediocre with retail sales that have barely grown in a single digit during the last months, without marking a clear positive trend.
Foreign investment record
Beyond Beijing, there is the case of Hong Kong that is a destination that now calls money. At the end of 2024, the autonomous territory attracted a record volume of capital of 8.7 billion dollars in investment commitments, 10% more than a year ago, according to the local investment promotion agency. Some 539 companies from the continent and abroad opened their operational bases in the city, compared to 382 of 2023. More than half of the new companies came from continental China, although proper names of the United States, France, the United Kingdom and Singapore were also included.
“This demonstrates the resilience and adaptation capacity of Hong Kong, and the great confidence of companies in the city as a basis for region“The head of the government office apostilled.
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