Why China’s bull run will have long legs

Foreign investors shorting Chinese shares are having a decidedly rough first couple of weeks of 2023.

A weeks-long rally is turning heads even as mainland data turns ugly in the short run. While all top-line economic data is ancient history by the time it’s released, China’s current series is as sepia-toned as they come, reflecting a pre-Covid-reopening era fast-losing market relevance.

As expected, indicators signaling a marked weakening of growth in 2022 before Chinese leader Xi Jinping changed course on Covid-19 lockdowns. Gross domestic product (GDP) expanded just 3% last year, the second slowest pace since 1970. That’s well below the roughly 5.5% Xi’s government wanted.