Despite current economic headwinds, HSBC’s Chief Financial Officer, Georges Elhedery, remains “very positive” about the mid- to long-term outlook for the Chinese economy. The growth in China has been hampered by a downturn in real estate, infrastructure, and exports, prompting Beijing to focus on bolstering manufacturing and domestic technology to modernize the economy and increase global competitiveness.
Elhedery believes that China is at a stage of economic maturity where it can transition into a model that is more reliant on consumers, the services industry, and high-value, sustainability-driven products like electric vehicles and batteries. This shift is seen as crucial for China to avoid falling into the middle-income trap and sustain its growth pattern in the long run. The recent push by the Chinese government towards these sectors signifies a significant step in the right direction.
While Elhedery acknowledges that there may be immediate economic challenges lasting a few quarters to a couple of years, he expresses confidence that China is on a better trajectory for the long run. He believes that the country is putting itself on a “materially better forward-looking track,” which will ultimately benefit the Chinese economy in the future.
HSBC faced challenges in meeting its full-year 2023 pretax profit forecasts due to a $3 billion write-down on its stake in China’s Bank of Communications and a reduction in exposure to Chinese commercial real estate. Despite these setbacks, Elhedery remains optimistic and reassures that the worst is behind them in terms of challenges related to the Chinese property market. He acknowledges that there may be lingering effects as the sector continues to adjust, but believes that the impact will not be as severe as in the previous year.
HSBC maintains a bullish outlook on the long-term prospects of the Chinese economy, citing the ongoing economic transition towards maturity as a key factor in driving sustainable growth. While short-term challenges may persist, the bank is confident that China’s strategic focus on industries of the future will pave the way for a stronger and more resilient economy in the years to come.