2020 has been a landmark year for Chinese markets, say Hudson Lockett and Thomas Hale in the Financial Times. Foreign investors have bought more than ¥1trn (£113.5bn) of local assets. Onshore bonds have been attracting particular attention, and little wonder: the US ten-year Treasury bond yields 0.9%, compared to 3.3% for the Chinese equivalent. There were ¥900bn (£102bn) in net foreign inflows into bonds during the year through to the end of November. Local stocks also took in ¥170bn (£19bn) from overseas buyers. The CSI 300 stock market benchmark is up more than 19% this year.
The world’s sudden need for masks and gel, coupled with demand from locked-down workers for IT equipment, has played to the country’s “manufacturing strengths”: medical equipment exports rose 42.5% on a year before during the first 11 months. Electronics exports rose 25% last month on the year.
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China is expected to be the only G20 nation to grow this year. By the end of 2021 the economy could be the same size as it would have been if the pandemic had never happened, says Simon Cox in The Economist. Policymakers have resorted to a familiar infrastructure-first stimulus playbook this year, leaving efforts to bring down debt levels to one side. 2021 will thus see the country confronting the same problem it had before Covid-19: how do you “deleverage the economy without killing growth”?
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