The Current Situation In China And What Other Economies Can Learn From It

Jan 20 2020 | 1 min

Currently in China: 4 months after the COVID-19 outbreak in China, the situation in the country is gradually improving, due to fast and aggressive measures taken along three dimensions: Virus containment, domestic growth recovery and fiscal and monetary policy easing.

Although GDP will be down circa 10% in Q1, a faster recovery is expected compared to the rest of the world with economic activity picking up again in March, e.g. major production facilities operating on 50 – 60% of their capacity.

The Chinese government announced public investments of up to US$ 394 bil. to boost GDP growth with focus on technology companies and large infrastructure projects.

What other economies can learn:

1) Take early aggressive measures such as introducing 1.5 m safety distance between people, ordering everybody to wear a mask outside of their homes.

2) Provide fiscal stimulus to boost economic activity

3) Ensure supply security: Ensure food production and supply network can continue to function

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For investors interested to invest in China:

Generally, investors should focus on industries that benefit from China’s fiscal care package. Apart from real estate, this could be for example businesses focusing on Artificial Intelligence and 5 G wireless technology.

Looking for good opportunities? Consult your relationship manager to find out which areas in China might be interesting to invest in at the moment.

Source: Wind, Goldman Sachs Global Investment Research

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