Is Xi’s Sudden Embrace of Business for Real? China Is Left Guessing.
Published On Feb 22, 2025, 12:00 AM
China's leader Xi Jinping recently showed support for the private sector at a meeting with top entrepreneurs, which is a significant shift from his previous stance. This gesture coincides with positive developments in the Chinese economy following a period of stagnation. A notable boost came from the success of the animated film 'Ne Zha 2' and advancements in AI technology by a startup, DeepSeek. This has led to a rally in the Hong Kong stock market. However, there remains skepticism about the sustainability of this newfound warmth towards businesses and whether it indicates a long-term shift in policy or merely a temporary reprieve.
Stock Forecasts
BABA
Negative
While there are signs of economic improvement, cautious investors should consider the historical unpredictability of the Chinese government's support for private enterprise. The Hong Kong market's rally may face headwinds if government policies revert back to tighter controls, particularly on influential firms. Hence, some negatively oriented stocks in sectors heavily regulated by the government may continue to underperform.
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