Chinese stocks Alibaba (BABA) and BYD (BYDDY) were bolstered today ahead of a Chinese government meeting next week aimed at “boosting consumption.”
China in Need of Domestic Boost
According to a report in the Financial Times, President Xi is set to unveil new measures on Monday to get consumers spending. China forecasts economic growth of 5% in 2025, a rate most Western countries can only dream of, but it is far off the pace of previous years. Indeed, since 1990 China has grown at an average of 9% each year.
Its domestic woes include a real estate crisis, high levels of local government debt and a reluctance by consumers to spend since the economy reopened post-Covid. The government is also now facing the added pressure of a trade war driven by President Trump’s tariffs tirade and uncertainty over geopolitics.
It is understood that the meeting will include officials from the central bank, finance ministry, commerce ministry and the National Development and Reform Commission, which is China’s economic planning agency. However, it is not clear what the stimulus measures might be, although it could include some form of increased payments to parents.
Private Sector Focus
Electric vehicle maker BYD was up 3% and e-commerce firm Alibaba was up 2.5%.
Another factor in the Chinese slowdown has been the self-inflicted wound of clamping down on private sector ambition and innovation in the last few years. This included regulatory crackdowns on companies like BABA leading to co-founder Jack Ma largely disappearing from public view.
However, in recent weeks the government has extended the olive branch to the private sector, pledging more finance and support. This is widely seen as a drive to boost China’s AI race with U.S. tech stocks, rather than driving consumption. But a healthier tech sector boosting the economy is likely to trickle down to spending in shops and online.
Is BABA a Good Stock to Buy Now?
On TipRanks, BABA has a Strong Buy consensus based on 16 Buy ratings. Its highest price target is $190. BABA stock’s consensus price target is $165.61 implying an 19.70% upside.
Questions or Comments about the article? Write to editor@tipranks.com