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Experts see a narrow path for China to engineer an economic rebound in 2024.
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While Beijing may manage to stabilize and achieve modest growth, a "bull case" seems unlikely.
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China faces severe real estate woes, deflation, and an exodus of global investors.
The world has yet to witness any post-pandemic rebound in China, and Wall Street expects little to change in 2024.
The ongoing exodus of global investors is evidence the bear case is intact, and the country's real estate sector continues to look more and more precarious. Meanwhile, Beijing must figure out how to resolve deflation and historic youth unemployment, as well as the crisis of confidence among its citizens.
It's possible China will achieve some degree of stabilization this year, but experts remain hesitant to make any bullish calls on the country.
The Chinese stock market, for one, has shed roughly $6 trillion in value since peaking in 2021. Tech names in particular, such as Tencent, Alibaba, and Baidu, have seen meteoric rise-and-falls in the last three years amid China's widespread antitrust crackdowns.
"Clearly, China's tighter rein on its tech companies over the last +3 years has put them at a serious disadvantage versus their US counterparts in public markets," DataTrek cofounders Nicholas Colas and Jessica Rabe wrote in a note Friday.
The lack of supportive policy — or anything like a coherent policy outlook — has kept benchmark indexes near multi-year lows. Foreign investors were net sellers in January for a record sixth month in a row.
Mike Edwards, deputy chief investment officer at Weiss Multi-Strategy, said policymakers haven't provided investors enough reason to move into stocks. "Dire sentiment" on China, he said, is just about universal right now.
"It's been relatively clear that a 'bazooka' or 'shock-and-awe' approach to stimulus is not in the cards," Edwards told Business Insider. "But we believe the turn can be engineered by demonstrating dedication to market-friendly policies, even if this dedication is born of desperation."
China's old and new economy
China has been attempting to shift from its old economy — powered by massive real estate growth — into a new one fueled by energy technology and manufacturing, according to Tracy Chen, a portfolio manager at Brandywine Global.
While the government is dedicating resources to lithium batteries, solar, and electric vehicles, she said it will ultimately take years for the transition to become sizable enough to compensate for the downturn in the property market.