China’s Economic Stimulus Creates Mixed Impact Across Global Sectors
Sectors tied to infrastructure and commodities are seeing the most significant gains, according to Abhay Agarwal, director at Piper Serica.
China's economic stimulus measures, aimed at revitalising its sluggish economy through policy easing, are yielding mixed results across global sectors. Sectors tied to infrastructure and commodities are seeing the most significant gains, according to Abhay Agarwal, director at Piper Serica.
"China’s increased infrastructure spending is driving up demand for raw materials like steel, copper, and aluminium," he said. "This is creating a massive boost for global commodity producers, especially those with significant exposure to China."
The metals and mining sectors, long reliant on Chinese demand, are experiencing renewed growth as the country ramps up its development projects.
Energy is another sector benefiting from China's push. "Oil and gas companies are seeing higher demand as industrial production rebounds," Agarwal said.
Energy consumption, particularly from factories and construction sites, has increased in tandem with China's economic revival. This demand surge has provided a tailwind for global energy producers, particularly in oil and gas, further stabilising the global energy market, according to Agarwal.
Abhay Agarwal, Founder of Piper Serica (Source: NDTV Profit)
However, he pointed out that not all sectors are poised to benefit. "The tech sector, for instance, is facing increased costs due to inflationary pressures and supply chain disruptions," he said.
Semiconductor and electronics manufacturers, already battling higher input costs, are now struggling with rising competition. The inflationary impact of China’s growth measures is hitting hard, adding complexity for tech firms reliant on Chinese manufacturing and supply chains.
Retail and consumer goods sectors are also feeling the pinch. "Inflation is squeezing consumer spending power, particularly in non-essential goods," Agarwal noted. As prices rise, Chinese consumers are becoming more selective, dampening demand for discretionary items.
China’s policies are expected to continue shaping global winners and losers as the country seeks to balance economic growth with inflationary pressures.
