Executive Summary 

After a stellar 2020, 2021 was bound to be a different year for the Chinese economy. Equity performance lagged, sweeping regulations were introduced while COVID-19, liquidity concerns in the property sector as well as climate and energy headwinds posed challenges. Faced with a multitude of near-term headwinds in 2022, we believe policymakers will:

• Focus on stability of growth around the concept of “Common prosperity” while engineering a soft-landing in the property sector and taking an easing policy stance to alleviate growth concerns, and;
• Continue to drive sustainability and innovation over the long-term, especially in areas of clean energy & new energy vehicles (“NEV’s”), IT software & hardware and healthcare 

In an increasingly policy-divergent world, we remain constructive on Chinese equities and believe the long-term investment case for the asset class, centered around consolidation, collaboration of offline & online business models and a broad-based technological catch-up remain intact, albeit with new risk-return possibilities. With that said, risks continue to prevail and we remain cautious of ensuing headwinds from evolving US-China relations, further downturns in the property sector and a potential resurgence in COVID-19 cases.

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2022 CHINA EQUITY OUTLOOK: CROUCHING TIGER, HIDDEN DRAGON