Is China investable again?

WITH Chinese stocks rallying hard this year, global investors are asking: is the country investable after all?

The answer is yes, and it always was. The broad Chinese market had fallen sharply this decade for a variety of reasons, but it was wrong for investors to dismiss the world’s second-largest market as uninvestable. Even now nothing fundamental has changed. No great economic revival is under way. The economy is still burdened by an ageing workforce and crippling debt, which are likely to slow the trend growth to under 3 per cent, well below Beijing’s target.

The big shift is in sentiment, accelerated by the recent news that DeepSeek offers a cost-effective Chinese alternative to US artificial intelligence (AI). Investors – foreigners in particular – are now rediscovering China for what it has been all along: a difficult market but too vast to be ignored, and capable of generating great innovation and opportunity in select pockets.

The Chinese market started to rally last year, as the government began unveiling some big-sounding stimulus measures. Most foreign investors stayed on the sidelines, spooked by the sticky growth slowdown and Beijing’s regulatory crackdowns. Then came Donald Trump’s election as US president, which only reinforced the belief that this market had become too risky to invest in.

If anything, Trump is turning out to be softer than expected on China, and the tariff pressure he has applied so far is pushing President Xi Jinping to make his country investable. Xi is trying to revive animal spirits, sending peace feelers out to the private sector. Last week, he staged a high-profile meeting with business leaders, and declared it fine to “get rich first” in China again.