China’s 2025 Growth Target Gets Boost from Morgan Stanley, AI Optimism Rises

FX Empire – China Unemployment Rate

Youth unemployment painted a gloomier picture, climbing to 16.9% in February, up from 16.1% in January.

AI Crucial for Long-Term Growth Prospects

Meanwhile, improving business sentiment may aid job creation and revive consumer confidence, potentially driving consumption. Alibaba Group (09988.HK) chairman Joe Tsai boosted hopes of falling unemployment on March 25, reportedly saying:

“Clear signs of business entrepreneurs being more confident since January, since President Xi met with private businesses. Company plans to re-start hiring after reaching bottom of business cycle.”

Tsai’s comments highlight China’s advancements in AI, a potentially long-term growth driver. Echoing this, Bank of England Governor Andrew Bailey emphasized AI’s transformative economic potential, stating:

“We must facilitate the growth of AI as the most likely general purpose technology which can move the needle on growth in the economy.”

Hang Seng Index Outperforms Mainland China’s Equity Markets

AI optimism has helped propel the Hang Seng Index, which has gained 16.69% year-to-date (YTD) despite a pullback from a March 19 three-year high. In contrast, the CSI 300 is flat, and the Shanghai Composite Index is up just 0.61%.

Tech giants Alibaba (09988.HK) and Baidu (09888.HK) have contributed to Hang Seng’s gains, with YTD returns of 56.92% and 11.85%, respectively.

Brian Tycangco, editor/analyst at Stansberry Research, dismissed concerns over fading stimulus and China’s market outlook:

“Some are saying China’s bull market is in danger of ending because of risks that stimulus will disappoint. Well, I don’t think so. PBoC has plenty of room to stimulate if the need arises. And I’ve noticed that they are more sensitive to market developments these days than they were 5 to 10 years ago.”