China’s No. 2 leader, Li Qiang, flew to Switzerland with a message for business leaders gathered for the World Economic Forum.
Mr. Li, China’s Prime Minister, said, “Choosing the Chinese market is not a risk, but an opportunity.” told An audience in Davos on Tuesday.
But there is a different perception of China’s role in the stock market and it is not so optimistic. Concerns about China’s economy have been visible for months in Hong Kong, where stocks fell 14 percent last year, the fourth consecutive annual decline.
There has been no respite in the new year, and economic data released by China on Wednesday prompted another selloff.
In Hong Kong, where many of China’s biggest companies trade, shares fell 3.7 percent on Wednesday. The market has lost one-tenth of its value so far this year. Shares in China’s financial capital Shanghai fell 2.1 percent, extending this year’s decline to nearly 5 percent.
Even though China said its economy will grow by 5.2 percent in 2023, which is high by most standards, it is undergoing a massive transformation. China’s leaders are trying to shift the country away from property and manufacturing, which have long been pillars of growth, while also reducing reliance on borrowed money.
The expected surge in consumption after China reversed its “zero-COVID” policy in late 2022 has also not materialized.
A declining population and an aging workforce are exacerbating the headwinds. China also said on Wednesday that its population has declined by 2 million people and is aging rapidly, putting further pressure on its already weak health care system and inadequate state pensions.
Although China’s economy has shown some modest improvement recently, “the recovery remains clearly shaky,” economists at Capital Economics wrote in a report.
Real estate and consumer companies were hardest hit by the selloff in Hong Kong, which for years has been a gateway for foreign investors looking to park money in mainland China. Chinese property developer Longfor Group fell 6.8 percent, while Chinese delivery service Meituan dropped 7 percent.
Stocks in the United States are flat so far this year, while share prices in Japan are rising more than 6 percent.
Many investors are looking to China to stimulate its economy with big stimulus as it has done during economic stress in the past, but policymakers have said this time is different.
Mr Qiang reiterated this reluctance in his address at the World Economic Forum. “We have avoided major incentives and not sought short-term growth at the expense of long-term risks,” he said.