How Is China Doing After the Stimulus? Reports from the Ground

A closer look at company statements, economic trends, and on-the-ground insights into the effectiveness of China’s recent stimulus measures.

The Stimulus That Fell Flat

At the end of September, the Chinese government started rolling out some stimulus programs. Initially, the market reacted strongly, but more recently, there has been huge disappointment among investors over the fiscal measures they released. Essentially, every 10 a.m. presser has led to a heavy drop in the Hong Kong and Mainland China stock exchanges.

I am not into technical analysis, but I coined a new term for this chart pattern: the “10 a.m. Presser.”

The Chinese government’s fiscal measures faced heavy criticism from foreign investors, who were largely disappointed as they had anticipated more robust stimulus actions. I’ve spoken with Chinese investors who, while also expressing disappointment with the stimulus measures, pointed out that foreign investors often have the wrong mindset and expectations, frequently misunderstanding the Chinese government’s inner workings. For example, foreign investors have at times anticipated economic or stimulus figures to be announced at meetings, even when it was clear locally that the government body involved lacked the authority to release such stimulus.

My take is that, on the one hand, I completely understand that it’s naive to expect the Chinese government to behave as the American government did in comparable situations. A key aspect of Chinese policy is that it often operates on longer timescales than Western governments to achieve its goals. However, on the other hand, to truly restore confidence in the Chinese consumer after COVID-19, some form of shock therapy might be necessary.

It’s just like with everything in life: if you’re in a bad place—whether it’s bad relationship, bad shape, or something else—you usually can’t get out of it by taking baby steps. It often requires a shocking revelation¹ to change the whole game going forward. We’ve seen time and again—for example, after COVID-19—that the U.S. government took much more dramatic measures than Europe, and that’s why they recovered much faster. This is ultimately a psychological issue.

Letting the Companies Do the Talking

Rather than adding my own thoughts to a topic that has already been widely discussed by investors and analysts, I thought it would be more interesting to explore how companies themselves are reacting to the stimulus measures. In the following, I’ve compiled a list of statements from various earnings reports and calls to gauge how businesses perceive and address these policies. In doing so, we might gain a better understanding of the practical impact these measures are having on the ground.

I attempted to compile statements from various sectors, including obvious ones like e-commerce players, as well as recruitment platforms, wealth and financial advisors, and real estate agencies. In doing so, we might gain a better understanding of the practical impact these measures are having on the ground. Also, let me know in the comments if I missed any important companies that should have been included.

You might argue that these are Chinese companies, and therefore their filings are unlikely to contain anything overtly negative. However, I’ve made a point to mainly focus on sections of the earnings calls that weren’t part of the prepared remarks. I’ve specifically selected comments that feel more genuine and reflective of the actual situation, avoiding generic or overly polished statements.

In any case, I’ve recently been conducting groundwork in China for some foreign funds, visiting companies across various sectors. The statements from larger companies, which I’ve compiled below, reflect sentiments similar to those expressed by smaller firms. I’ve met with some of these smaller companies several times now, and in off-the-record conversations, they’ve been quite candid about policies in the past, openly discussing both the positives and the negatives. While I’m not disclosing their names or the exact details of our discussions, their impressions of the stimulus closely align with those of the larger companies.

If you’re short on time, I’ve included a brief summary at the end of this article. However, I strongly recommend reading the full statements to capture each company’s original tone and message.

Tencent $700:HK

• We do get encouraged by the recent policy by the Chinese government to stimulus provide stimulus to the economy. And we felt this policy direction is very constructive. It's very timely, and the resolution is actually very strong. So that's why we are constructive on the longer-term economic outlook. We believe that the economic growth would eventually reaccelerate. Although the timing may be uncertain, and especially, it would take some time for the measures to be implemented and additional time for the measures to take effect.

• Now in terms of just looking at the macroeconomic environment right now, what we have seen is that there is an uptick in October after the policy got announced in terms of transaction value. And that's actually against a backdrop of a gradual decrease of year-on-year growth rate through the -- each month in the third quarter. So if you look at the trend, it was like month-on-month, year-on-year growth rate has been declining through the third quarter until we hit October and there's an uptick.

• We believe, going forward, the economic recovery would take some time. But over the long run, we do believe it would definitely be reaccelerating because we felt there is a very strong resolution by the government to revive the economy.

• The overall macro environment will obviously be important accelerator or decelerator or neutral force for the aggregate advertising market. And that in turn will be a function primarily of consumer confidence.

Alibaba BABA 0.00%↑

• We're optimistic about the government's macro stimulus policies and are confident in their positive long-term economic impact.

• Indeed, from the end of September onwards, various different monetary and fiscal stimulus measures have been announced at the national level and in many different localities, also trade-in programs are being run for upgrading electronic goods as well as subsidies for home appliance and automobile purchases. So these programs definitely are stimulating growth in sales in the relevant categories. And I think these stimulus measures are really just getting started and over time, will have a positive impact on driving consumption overall. I think these policies in particular, will also help reduce merchants' destocking cycles and have a medium- to long-term effect in terms of driving the consumption of branded goods.

Jingdong JD 0.00%↑

• Yes, current macro policies have been taking a positive effect on the overall consumption sentiment. And we expect as these policies continues to take effect, this will help improve the economic fundamentals and to help recover and improve household income, which will all provide more energy and validation to the consumption potential.

• Additionally, at the recent National People’s Congress meeting, the government unveiled a plan to introduce a more forceful fiscal stimulus based on next year’s economic and social development objectives. Expanding the trade-in program to include a greater scale and more categories of consumer goods is one of the measures included in this supportive plan. We believe expanding the trade-in policy will further support consumer spending. […] We hope this policy will continue and expand to other categories to sustain this meaningful momentum.

Vipshop VIPS 0.00%↑

• In terms of consumer sentiment, of course, the government sponsored the trading programs launched towards the end of September do give us some boost to our certain categories in electronics and home appliances. […] And overall sentiment may have bottomed out following the recent stimulus package, but still, it's a rather rational environment to us. We are still seeing -- customers are still showing signs of being stretched. They are making trade-offs in family budgets, looking for value, focusing on essentials and delaying purchases until the mid of moment.

• So we haven't seen a very meaningful recovery in consumer sentiment as compared to prior quarters. And lastly, on 2025 outlook, we do believe that it's -- we think it's pretty unpredictable. We were going to plan our business cautiously. It depends on a number of factors, whether macro is going to have better recovery, whether consumer confidence is going to pick up. And there are a lot of uncertainties.

Meituan $3690:HK

• Yes, we noticed that from the end of September onwards, various monetary and fiscal stimulus measures have been announced. We think these measures aim to restore consumer confidence and realize the huge potential of consumption in China. On our own platform, we also noticed that consumption in hotel travel during the National Day holiday pickup. In October, year-over-year decrease in the average order value of our food delivery business narrowed compared to the past few months. While it will take some time for the positive effect to fully materialize and to further pass on to more consumption categories, we are confident that this policy will gradually provide more support for a real economy and incentivize consumer spending, bringing more growth opportunity for our business.

Pinduoduo PDD 0.00%↑ and Xiaomi $1810:HK

Interestingly both PDD and Xiaomi were not asked about the government stimulus and PDD only said this:

• For instance, multiple macro policies introduced this year have brought significant support to industries and fueled consumer demand.

Noah NOAH 0.00%↑

• We still strongly believe that to advise clients to use their RMB assets to invest in global beta returns, which is still one of the most important asset allocation advice that we give to client, because we think that the policy still needs time to be implemented and the fundamentals or the economic fundamentals still need time to show whether we'll be improved.

• And since we're a wealth management company, we are not a trading-driven strategy rather, we are more taking a long-term asset allocation view. Therefore, we haven't really changed our CIO house view, but that being said, we still have enhanced our product shelf on the RMB side. Although we're still advocating to advise clients using QDII and QDLP products to invest globally, so we have definitely introduced some of the RMB exposure products as well recently.

Tongdao Liepin $6100:HK

• At the end of September, the government introduced a package of incremental policies, which have positively impacted overall market confidence and improved expectations. However, considering the current and complex international environment, especially the potential impact of future overseas tariffs on China, export manufacturing may still face significant pressure in the next 2 years. Domestically, we also need to continue observing whether key industries can stabilize and whether domestic demand and consumption can gradually improve. […] But compared to the first half of the year, if these policies can be fully implemented, it is possible that enterprises' confidence in the recruitment market will gradually recover in the next 2 years.

• Looking at platform data, the positive impact of policies on the short-term recruitment market is not yet apparent, and the mid-to-high end recruitment market continues the trend of the first 3 quarters with overall pressure.

• As for the recruitment market next year, it mainly depends on the implementation of government stimulus policies since the end of September and speed of business confidence recovery. Currently, based on our communication with business customers, most are still in wait-and-see stage regarding whether to increase recruitment. So we remain cautiously optimistic and hope that recovery will gradually stable next year, and we will see the conference in December.

Boss Zhipin BZ 0.00%↑

• Firstly, we noticed that the newly added enterprise users every day has been improving on a year-on-year basis since the end of October. And please note that November and December are traditionally relatively low season for recruitment. However, the newly added enterprise users improving on a year on-year basis since October. My understanding is that this is a good news and this trend have continued into November and December.

• And despite of this good news, good signs, my understanding is that this supporting policy takes some time to transfer into actual improvement of economy and improvement, actual improvement of enterprise recruitment demand. So this should take some time, and we should stay patient.

KE Holdings BEKE 0.00%↑

A huge part of the earnings call of BEKE was about macro and policies. If you are interested you should read the whole transcript.

• We are also pleased to see that the supportive policy packages introduced by the government at the end of September have already shown promising initial results. In October, transaction volumes on our platform rebounded significantly, signaling the start of the market recovery.

• The market in the third quarter of this year gradually retreated following the pulse-like rebound fueled by the intensive supportive policies released in May. The existing home market was relatively stable, while the new home market was still in a bottoming stage with weak supply and demand.

• According to the estimate from data disclosed by the housing bureaus and housing associations of the fourth first-tier cities, total number of online registered transactions for existing home grew by about 21% year-over-year in the third quarter. New home transaction GTV or CRIC top 100 developer declined 29% year-over-year.

• Regarding the new home market, the latest round of policies also led to a rebound in the new home market. In October, the GTV of CRIC top 100 developers increased by 73% from September and 7% from the same time last year.

• In Q3, overall our market performance was muted, as the effect of the May 17 policies restated, coupled with the low summer season, the existing home transaction market shows a month-by-month decline in July, August and September. For the new home market, the year-over-year decline in GTV of CRIC top 100 real estate developers also worsened month by month in Q3, even after seasonal improvement middle year. However, since the launch of the policy package at the end of September, transaction volume in existing and the new home market surged nationwide. Tier 1 cities led this jump. Meanwhile, with a huge transaction volumes, home prices also show signs of temporary stabilization. Overall, this round of policies has driven stronger market recovery than last 2 previous rounds on August 31 last year and May 17 this year.

• For details, this round of the policy exceeded the last 2 rounds in both scope and intensity. Unlike previous relaxation in either purchase restriction or mortgage condition, this round of policy introduced a whole package of the countercyclical policies, directly initiated by the Politburo in response to new issues in the current market economy combined with greater credit support from the Central Bank and the swift implementation of purchase restriction relaxation in Tier 1 cities that led to the market outperformance. In particular, the Politburo making explicitly emphasize the first time to stop decline of the real estate market. This work shows the country's commitment to stabilizing the housing market that leads to a stronger recovery in market expectation compared to previous 2 rounds. For existing home market, following this round of policies, transaction volumes have increased significantly across first, second and third-tier cities. This contrast with post May 17 policy response, where the rebound was only in the fourth-tier cities.

• Regarding the market outlook in the future, the latest round of policy has more enduring effect on housing market, given its wider scope and the intensity compared to previous ones. It is worth noting that since October and through the first 2 weeks of November, the weekly existing home transaction volume on the platform have remained stable at a high level, demonstrating a strong short-term momentum. We expect the market to be relatively stable in the fourth quarter.

Summary

• I think it’s fair to say that companies generally acknowledge and appreciate the urgency demonstrated in the recent government stimulus measures, which marks a clear improvement compared to the inaction of the past. However, they collectively agree that these efforts are insufficient on their own. The new policies will require time for implementation, and their effectiveness will depend on how broadly they are expanded. Even after implementation, it will take additional time for these measures to produce a tangible impact on the economy.

• Following the stimulus introduced at the end of September, companies observed a noticeable uptick in October across key metrics, including real estate sales and e-commerce payment data. Real estate, in particular, showed a significant recovery in October, a crucial development given that most Chinese consumer wealth is tied to property values.

• Despite these early signs of improvement, the broader sentiment in the Chinese economy remains cautious. Consumers, as well as businesses, appear to be in a “wait and see” mindset, anticipating further policy actions. These policy changes could be very strong as I have written about here. Financial advisors have noted this hesitancy, with many continuing to recommend that Chinese investors allocate funds to foreign equities, citing ongoing pessimism about the domestic outlook. It is clear that a meaningful recovery will require time and sustained effort.

That being said, these are all high-level developments, but there is a crucial trend unfolding in China that remains largely overlooked by foreign investors. This is likely because it’s difficult to observe this development from afar. This will be the focus of my next article, so make sure to subscribe so you don’t miss it. I believe this is the driving theme of China’s development over the next decade.

1. The idea of “shock therapy” reminds me of Pavlov and his famous dogs. You know, the guy who made dogs drool at the sound of a bell. Well, after a big flood drowned his lab (don’t worry, the dogs survived), their perfectly trained responses were wiped clean. Pavlov had to hit the reset button with some dramatic reconditioning to get them back on track. The lesson? Sometimes you need a good shake-up to reset old patterns—whether it’s dogs, or humans.