Fitch 'neutral' on China, flags realty risks

Moody's downgraded China's economic outlook from 'stable' to 'negative,' citing persistent medium-term growth concerns and the ongoing property sector downsizing. The agency anticipates China's property sector to remain smaller relative to the overall economy. Moody's projects China's GDP growth at 4% in 2024-2025 and an average of 3.8% between 2026-2030.

China is planning to implement fiscal stimulus measures to support its economic recovery, relying on debt and state spending. Some government advisers are suggesting increasing the budget deficit target beyond 3% of GDP to issue more bonds. While China's economy grew faster than expected in Q3 2021, concerns remain about the decline of the private sector and the lack of long-term reforms needed for sustainable growth. The focus is currently on sustaining the fragile recovery.

China's President Xi Jinping and top leaders declared that making industrial policy a main economic focus in the coming year. This disappointed investors expecting stronger measures to boost growth. The Communist Party's annual conference shifted focus to building a modern industrial system as the top goal, emphasizing technology and artificial intelligence over boosting domestic demand.

China's economy is facing multiple challenges including sluggish consumer spending, a crisis in the property market, weakening exports, record youth unemployment, and high local government debt. These issues are starting to impact the global economy, and there are concerns that China may experience a Japan-style economic malaise. President Xi Jinping's government has limited options to fix the problems, and their usual playbook of large-scale stimulus has led to oversupply and high debt.

Fitch emphasized that India's investment landscape is expected to be a key driver of economic growth, citing the continuation of the government's capital expenditure drive and a gradual acceleration of private investment. Despite the positive outlook, Fitch points out that beyond the fiscal year 2024, there is increased uncertainty regarding the fiscal path.

International Business News: International Monetary Fund chief Kristalina Georgieva warned on Sunday that risks to financial stability had increased and stressed "the need for vig

Fitch Ratings on Tuesday affirmed India's sovereign rating with a stable outlook saying the country has a robust growth outlook and resilient external finances.

In the mutual fund portfolio, the best-performing fund of the year 2023 may not be the best-performing fund in 2024. Therefore, it is important to not chase the best-performing fund and invest based on the individual funds portfolio positioning and the fund managers experience of managing volatility as the year 2024 may be volatile.

The growth in China's GDP comes amid a rebound in consumption, as people flocked to shopping malls and restaurants after harsh COVID-19 restrictions were removed

With its growth slowing, China’s future is uncertain. We should be grateful if the change is not sudden