China’s Economy Shows Signs of Recovery as Consumer Spending Increases

Urumqi, Xinjiang, China, An China South Airlines Airbus A320 flight lands at Urumqi Diwopu International Airport in 2020.

According to Brendan Ahern, Chief Investment Officer of KraneShares, China’s pandemic-affected economy is witnessing a gradual rebound in consumer spending. While the recovery is not instantaneous, Ahern notes that the National Bureau of Statistics of China has reported an increase in retail sales since November of the previous year.

Ahern, who is involved with China-focused ETFs at KraneShares, anticipates that Chinese companies’ quarterly earnings will improve with each consecutive quarter. This forecast may already be coming to fruition, as tech giants Baidu and Tencent exceeded revenue expectations for the first quarter of 2023. However, Alibaba fell short of revenue estimates.

Furthermore, the reopening of China is expected to have a positive impact on the airline industry. Singapore Airlines, Japan’s All Nippon Airways, and Japan Airlines have highlighted the demand from China as a contributing factor to future earnings, as they reported net profits for the financial year ending in March 2023.

In a special interview with CNBC, Will Rhind, CEO of GraniteShares, echoed the sentiment of growth. He observed a rebound in domestic travel but noted that the recovery in international travel is yet to be seen. Rhind remains optimistic that international travel will eventually rebound, although he believes it may take some time.

While China faces a new wave of COVID-19 cases, Rhind and Ahern believe that previous lockdowns are unlikely to be repeated and will not hinder the trajectory of the reopening. Despite concerns about the recent surge in cases, both experts see positive signs for China’s economy and anticipate further recovery in the coming months.