Positive vibes in the Chinese economy

This is what the Chinese business press is buzzing about today:

Yesterday saw the biggest expansion of cross-border trading in history, according to financial news site Huanqiu.com and Financial Times.

In what has been described as a “milestone” (里程碑), the stock exchanges of Hong Kong, Shanghai, and Shenzhen increased their stock connect programs by nearly 40%. According to the Hong Kong Stock Exchange, the number of stocks listed in the Shanghai and Shenzhen Stock Connect programmes will reach 1,192 and 1,336 respectively.

Many of the new additions are foreign firms, such as U.K.-listed savings group Prudential Plc, whose CFO said that this “will allow more investors in the Chinese mainland to share our growth and help lift our profile and shareholder base in China further.” Other well-known companies include Samsonite, the luggage retailer, and luxury brand L’Occitane.

This is good news both for foreign firms listed in Hong Kong, who will now have access to more liquidity, and also for Chinese investors, who will for the first time be able to invest in these firms. Per the FT, China’s retail investors control over $3.5 trillion in their trading accounts.

However, this move might actually be more beneficial for mainland companies that will also now have a better facility to attract foreign investment. Indeed, one report states that numerous stocks doubled in value on their first day.

Strong start to 2023 for domestic wind power

Data released for January and February show that tenders for new wind projects rose 112.09% to reach 12.28 GW. The chief analyst for sustainable energy resources at Guosheng Securities expects to see shipments increase in 2023 by 50-100% year-on-year.

This follows a spree of turbine building in China. The end of last year saw the unveiling of gigantic turbines, each capable of producing 16 MW of energy, double what was being produced in 2019. However, China is still only 33% of the way towards its target of the current Five-Year Plan period (2021-2025).

Foreign companies have little share of China’s market, as the price competition is fierce, often dropping to unprofitable levels. Moreover, Chinese firms are making a greater play to capture the global market. China is already the world leader in offshore capacity.

Survey suggests Chinese companies want to hire

A report released by S&P shows that Chinese firms are more eager to hire than any time in the last eight years. The survey polled firms on whether they project an increase in the number of employees over the next 12 months.

While in October only 2% of respondents were confident they would hire more staff, that has now jumped to 11% as the economic outlook for the year improves.

The report also argues that business confidence is at a decade high, and that the number of firms planning to increase their investment is the highest since October 2021.