China’s economy and social compact are undergoing profound transformations under Xi’s leadership. The country has pivoted from a growth model reliant on speculative real estate investments to one focused on a sustainable, innovative, high-tech economy.
China’s historically high savings had traditionally been channelled into the property sector, fuelling rampant speculation, overinvestment in real estate, and diminished productivity. When the property bubble burst in 2022, it triggered a prolonged economic slump.
To avoid repeating this cycle, the Chinese leadership under President Xi Jinping has decided that these savings should be redirected toward reformed and well-regulated domestic stock markets, modelled after those in the US. It is seen as essential for China to transform its speculative stock market into a primary funding source for both industrial upgrading and the development of an advanced manufacturing sector. “Patient capital” is viewed as critical for this national endeavour, where domestic institutional asset owners and asset management firms will help drive China’s long-term industrial growth and economic transformation.
