Highlights

• The export trade has overgrown and has a more significant effect on the economy.
• Real estate drove China’s economic growth.
• China’s economic development will face triple pressures.

Overview

2022 is a year with a high incidence of unexpected events around the world. In the first half of 2022, a new round of stronger epidemic impact (COVID-19, monkeypox), the further surge in commodity prices under the conflict between Russia and Ukraine, continued decline in the real estate industry under pessimistic expectations, and high global inflation under the US and European currencies. The rapid change in policy and the fall from high levels of foreign trade and the Internet high-tech industry after years of expansion have further increased the downward pressure on China’s economy in an all-around way. Therefore, various regions and departments efficiently coordinate epidemic prevention control and economic social development, increasing macro-policy adjustment.

Comprehensive Measures to Stabilize the Economy

It is well known that China’s control of COVID-19 has been a cause for concern in global activities. Regular nucleic acid testing in all regions has effectively controlled the development of the virus, and the isolation policy is also very strict. Under these policies, the safety of most people is guaranteed. However, the economic pressure on the country has also increased. We can say that the epidemic is the biggest uncertainty factor affecting economic recovery. With the continuous strengthening of the control of the epidemic in various places, the risk of the epidemic has begun to show a downward trend, production capacity has gradually recovered, and economic activities are expected to recover further.

The Russian-Ukrainian conflict is not only prolonged but also intensified in an all-round way, resulting in an overall deterioration of China’s geopolitical environment and a strong spillover effect on the economy from international military politics. Since the outbreak of the Russia-Ukraine conflict at the end of February, it has triggered a global energy supply crisis and a food security crisis. The Chinese economy is facing the impact of imported inflation caused by the surge in international crude oil, natural gas, wheat, and other prices, mainly affecting the price of industrial products PPI, but the guaranteed supply is the impact of price stabilization policies. Looking at all aspects of the situation, there is still no sign of peace talks between the parties to the conflict between Russia and Ukraine. Instead, there is a risk of expanding local battlefields.

The price of global industrial raw materials is highly correlated with Chinese exports. Because the price of industrial raw materials reflects changes in overseas demand to a certain extent, and overseas demand also directly affects China’s export growth rate. Global demand began to slow, and industrial product prices fell year-on-year. China’s supply chain and industrial chain broke down under the impact of the epidemic and prevention and control policies. At the same time, the supply chain and industrial chain of developed countries, India, Southeast Asia, Latin America, and other countries have fully recovered, which may lead to the replacement of Chinese exports and the global industrial chain drift occurs. However, under the circumstance of repeated global epidemics, the overseas market demand is strong, and the advantages of the country’s epidemic prevention measures and the stability of the industrial chain continue to be prominent, and the export trade has proliferated has a more significant effect on the economy.

Real estate once drove China’s economic growth. Judging from the sales data of commercial housing and real estate transaction prices in 70 cities, they are now in a downward stage, indicating that the real estate market is still in the process of bottoming out. The prices of new commercial housing and second-hand housing in 70 large and medium-sized cities fell by 1.3% and 2.7% year-on-year respectively. In the first half of the year, the sales area and sales of commercial housing decreased by 22.2% and 28.9% year-on-year respectively; real estate development investment decreased by 5.4% year-on-year, of which residential development investment decreased by 4.5% year-on-year. At present, the effect of the easing policy of “policy by city” is still under investigation.

Marked by the State Council’s meeting of the National Economic Stabilization Market to issue the “Package of Policy Measures to Steady and Stabilize the Economy”, the macroeconomic policy has clearly established an overall loose position. The comprehensive advance of existing policies, the comprehensive introduction of incremental policies, the strong supervision of the central government, the implementation of various levels of governments and departments, the guarantee of short-term funds and finance, and the staged victory of epidemic prevention and control can ensure China’s economic parameters a rapid rebound has occurred and an accelerated rebound in the Chinese economy is guaranteed.

China Stock Market Forecast: Investing in China Stocks with I Know First

I Know First provides predictions for China stock market based on the AI algorithm for six horizons: 3-day, 7-day, 14-day, 1-month, 3-months, and 1-year. I Know First has constructed three packages that cover China stocks: Shenzhen Stocks, Shanghai Stocks, and Hong Kong Stocks. Below, we can observe the performance of the prediction of the China stock packages which were sent to our clients (you can access our forecast packages here).

Package Name: By Country – Hong Kong Stocks
Recommended Positions: Short
Forecast Length: 1 Month (9/28/22 – 10/28/22)
I Know First Average: 10.82%

Package Name: Shanghai Stock Forecast
Recommended Positions: Long
Forecast Length: 7 Days (10/14/22 – 10/21/22)
I Know First Average: 5.12%

Package Name: Shenzhen Stock Forecast
Recommended Positions: Long
Forecast Length: 3 Days (10/14/22 – 10/17/22)
I Know First Average: 5.59%

Conclusion

In 2022, China’s economic development will face triple pressures of shrinking demand, supply shock, and weakening expectations. Under the impact of the epidemic, the external environment will become more complex, severe, and uncertain. Steady growth will remain the core of economic work in 2022. Continue to adhere to the work tone of seeking progress while maintaining stability, make every effort to stabilize the economic market, and escort high-quality economic development. I Know First provides a forecast package for short-term and long-term periods to help our clients to find the most promising investment opportunities in China stock market.  

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