China’s economy is showing signs of rebalancing as consumption growth nearly caught up to factory output, in an upswing that now depends on how much more stimulus Beijing may deploy in the event of a tariff shock when Donald Trump returns to the White House in 2025. Retail sales grew at the strongest pace in eight months, after Beijing introduced measures such as subsidizing purchases of equipment, appliances and cars. Home-price declines abated for a second month in October. To be sure, industrial output rose 5.3%, lower than forecast. But the strength in retail spending is a boost to a part of the economy that has trailed growth in production, which has long benefited from Beijing’s manufacturing-focused policy support. The good news helped bolster Asian stocks. The question now is whether these green shoots for China will grow fast enough to meet the nation’s annual growth target of around 5%.
Good news notwithstanding, two of the world’s most prominent investors are signaling the days of across-the-board gains in Chinese stocks may be ending. David Tepper, the billionaire money manager who made waves with his call to buy “everything” related to Chinese stocks in September, trimmed his exposure to Alibaba and the iShares China Large-Cap exchange-traded fund in the third quarter, even as his overall China holdings increased to 38% of his reported equity portfolio. Michael Burry, the hedge fund manager famous for his 2008 bet against the US housing market, raised his exposure to China stocks including Alibaba but also added new bearish options that would provide downside protection.
