Several major banks have cut their 2023 GDP growth forecasts for China to a 5.1% to 5.7% range from an earlier range of 5.5% to 6.3%.
Chinese stocks on Monday posted their biggest fall in two weeks, but the weakness was not confined to China. The MSCI World index came off last week’s 14-month high, Japan’s Nikkei lost 1%, and Hong Kong tech and the MSCI Asia ex-Japan index both had their biggest falls in three weeks.
That’s the economic and market backdrop to U.S. Secretary of State Blinken’s visit to Beijing, which ended on Monday with all the diplomatic courtesies and protocols one would expect, but with no major breakthrough for investors to cling to.
The two countries agreed to stabilize their rivalry so it doesn’t veer into conflict, hailed “progress” and stressed the importance of a more stable relationship. But they appeared entrenched in their positions over everything from Taiwan to trade, including U.S. actions toward China’s chip industry, human rights and Russia’s war against Ukraine.
The yuan remains under pressure, anchored near seven-month lows against the dollar, and sentiment toward the Chinese currency will not have been boosted by the auspicious start to yuan-denominated trading in certain Hong Kong stocks on Monday.
The 24 companies that debuted the yuan-denominated stock trading scheme attracted a small fraction of their stocks’ trading volume, as interest in using the new currency option was dwarfed by the Hong Kong dollar.
It is early days, of course, but perhaps another reminder that the yuan’s road to internationalization is a very long one.
