Korea Investment & Securities Co. said on the 30th that sales and profits of China's industrial corporations rebounded sharply, adding that Chinese stocks could serve as a haven amid external uncertainty.
At the start of this year, China's economy showed a solid beginning. Following the release of China's key economic indicators for January–February that beat market expectations, growth has continued in industrial corporations' sales and profits. Industrial corporations' sales and profits rose 5.3% and 15.2%, respectively, from a year earlier, marking the highest growth rate since 2022 and 2021, respectively.
Korea Investment & Securities Co. focused on the restocking cycle that is appearing alongside improving prices. In January–February, inventories at China's industrial corporations increased 6.6% year over year, the largest rise since March 2023 (9.1%). Jeong Jeong-yeong, an analyst at Korea Investment & Securities Co., said, "In the past two to three years, even after reopening, Chinese corporations failed to secure inventories because of continued demand contraction and falling prices," and added, "Falling utilization rates and low-price exports were the key words that described Chinese manufacturing."
Price expectations of Chinese corporations are being revised upward after the second half of 2025. Jeong said, "As signs of a recovery in domestic demand appear and the government's slogan to eliminate vicious cutthroat price competition is entering the implementation phase, we expect an acceleration of the China-led restocking cycle."
Korea Investment & Securities Co. predicted that price improvement and the restocking cycle, long viewed as the biggest weaknesses of China's economy, will become factors supporting the floor of the economy and the stock market. Jeong said, "Amid growing volatility in global financial markets due to Middle East–driven geopolitical risks, the role of a safe harbor for global funds could also come into focus."
The greater the external uncertainty grows, the stronger policy support is expected to become for achieving China's goal of building a "domestic demand–led strong domestic market."
Jeong said, "With the conclusion of the Two Sessions in March, policy rollout will begin in April," and added, "After slowing in the second half of last year, the pace of fiscal expenditure has reentered an acceleration phase since the start of the year, and the previously flagged possibilities of a reserve requirement ratio cut and interest rate cuts are increasing."