In a recent Eurizon SLJ Capital research note, Stephen Jen and Joana Freire examine China’s economic recovery after several years of pressure from the property sector, weak investor confidence and regulatory uncertainty.
The note argues that China’s economy is not necessarily re-accelerating in headline terms, but is moving onto a stronger structural path. The authors highlight the resilience of the economy through the property downturn, the shift toward higher-quality growth, and the continued importance of strategic sectors such as AI, higher-technology manufacturing, alternative energy and industrial self-sufficiency.
As Stephen and Joana write:
“Even though China’s real economy is not re-accelerating, it is on a superior structural trajectory with higher quality growth.”
The note also contrasts China’s property correction with earlier concerns that the country could follow Japan’s post-bubble experience. Despite a substantial fall in property prices and a sharp contraction in new supply, the authors argue that China has absorbed the adjustment better than many expected.
They write:
“Looking back at how the deflating property bubble was digested by the Chinese economy since 2020, we find it remarkable that very few things broke in China.”
The research note also sets out a constructive view on Chinese financial assets. Stephen and Joana see potential upside for Chinese equities in 2026, supported by expected earnings growth, still-discounted valuations, household savings, improving sentiment and the potential for RMB appreciation.
As they conclude:
“China has turned a corner, finally.”
The note also remains positive on RMB bonds, describing them as a useful diversifier for global portfolios, and argues that China’s recovery is particularly relevant at a time when global investors are reassessing exposure to U.S. dollar assets.
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