China's economy remains resilient with strong underlying strengths and long-term opportunities, Hong Kong officials and UBS' Ermotti said

China's economy remains resilient despite a variety of headwinds, and global investors should focus on long-term opportunities and leverage Hong Kong's role as a “super-connector,” according to government officials and business executives.

“Hong Kong is the only city in the world where China's advantages and international advantages converge,” Finance Minister Paul Chan Mo-po said at a Milken Institute investor symposium on Tuesday. Hong Kong is “the best place” to bring business opportunities and business people together, he added.

The city will further improve the stock listing regime, reciprocal market access arrangements with the mainland and offshore yuan business to attract more investors, Chan said, emphasizing its role as a “connector” between China and the world.

China this month set a growth target of around 5 percent for this year, similar to last year, as growth adjusted to challenges such as a prolonged slump in the property market and currency devaluation. Geopolitical tensions and technology sanctions from Western countries have also hindered exports.

An aerial view of shipping containers stacked at Lianyungang Port in Lianyungang, eastern Jiangsu province, March 26, 2024. Photo: AFP

More than 550 global executives, including UBS CEO Sergio Ermotti and BYD Vice President Stella Li, will attend the two-day event in Hong Kong to discuss current and future trends shaping the global economy.

The symposium allowed “weary investors” to address China investments as well as critical issues affecting the financial industry, said Robin Hu, the institute's Asia chairman, who pitched the idea of ​​hosting the symposium to Chan South China Morning Post Southeast Asia Conference last year in Singapore.Clara Chan, CEO of Hong Kong Investment Corp, speaks at the Milken Institute Global Investors' Symposium on March 26, 2024. Photo: BloombergChina, the world's second-largest economy, is transitioning to slower growth and a healthier, more sustainable future, according to Hong Kong Investment Corp (HKIC), a unit that manages the Hong Kong government's growth portfolio, technology fund and investments in the Greater Bay Area. Hong Kong will definitely play a role in the transition, she added.

“We have the advantage of being an international financial center,” Clara Chan, CEO of HKIC, said at the symposium. “We have a robust, dynamic and open economy. “These are very important components in shaping the next China narrative.”

According to Ermotti, China's economic transition will not be easy as the country abandons its dependence on the real estate sector. Continued geopolitical tensions would likely lead to “volatility in macroeconomic developments” affecting not only China but also Asia, he added.

UBS CEO Sergio Ermotti at the Milken Institute Global Investors' Symposium in Hong Kong on March 26, 2024. Photo: Bloomberg

However, investors should take a long-term view while minimizing the impact of short-term headwinds, Ermotti said, as China is still at the forefront of innovation in many key industries.

Fred Hu, founder and chairman of private equity firm Primavera Capital, is cautiously optimistic about China's economic prospects. While a variety of challenges hamper China's stronger economic growth, investors should not forget the underlying strengths, which are “very, very powerful,” he added.

China's private sector is low but not out of the game yet, Hu said, adding that manufacturing innovation, productivity growth and household balance sheets remain strong.

“There is still a lot the government can do, such as through monetary policy, to boost inflation and stop deflation, and there is also room for more fiscal policy [boost]Hu added. “The government should really boost consumer and business confidence. As domestic confidence returns, the Chinese economy will bounce back.”