In this video series, WAM Global Senior Investment Analyst William Liu shares his unique perspective on China’s rapidly evolving economy, drawing from his recent trip where he reconnected with the country following his university exchange seven years ago. He reflects on the dynamic changes he’s witnessed in the business landscape and discusses how the country’s fiscal stimulus measures, despite their optimism, may not be enough to drive substantial growth just yet.
Will highlights exciting opportunities for both local Chinese and Western companies operating in China, as well as the challenges posed by increasing geopolitical tensions, such as US tariffs. Focusing on the evolving consumer landscape, Will also delves into the shift towards value-driven purchasing and the rising competition between Western and local Chinese brands. Tune in to understand why he believes China’s trajectory is improving, with optimism for the future, even if the true acceleration may not be seen until 2025.
Consumption Downgrade
There is an ongoing trend of consumption downgrading in China, where consumers are prioritising value for money across various sectors. Despite fiscal stimulus measures, Will believes the broader economic recovery will take time, with a significant acceleration likely not occurring until 2025.
Domestic vs. Foreign Competition
Will observes a shift in the Chinese consumer market, where local brands are increasingly competing with Western ones by offering high-quality products at competitive prices. He emphasises that Western brands can no longer rely on their historical image of quality and must innovate to engage consumers effectively.
Impact of the US Election
It is clear to see that there are escalating tensions between the U.S. and China, particularly regarding tariffs under a potential Trump administration. Will highlights how increasing tariffs and challenges for Chinese companies doing business in the U.S. are expected to continue, making it harder for Chinese firms to operate internationally.
Fiscal Stimulus Opportunities
Will discusses China’s fiscal stimulus measures, which have sparked optimism for investment opportunities, but expresses caution about the sustainability of the recent rally. He notes that while the economy is on an improving trajectory, further stimulus will likely be needed for substantial recovery.
Will’s Highlight of the Trip
Highlighting the rapid economic growth and dynamic innovation he experienced firsthand, Will reflects on his return to China after seven years. He shares his excitement about the country’s evolving landscape and the vibrancy he felt while reconnecting with people there.
