A first trip back to China post pandemic highlighted the reality of its economic rebound as well as the potential for growth that lies ahead.

Getting to China proved no small feat in itself on my first trip to the country post Covid. Authorities still hadn’t waived visa restrictions put in place to counter the pandemic, causing a backlog of travellers at Singapore’s visa centre – whether for business, pleasure or family reasons.

Posts about queues stretching into the early hours proliferated social media from people trying to secure visa slots. As an investor based in our Singapore HQ, it served as a reminder of the benefits of having fixed income colleagues based on the ground in China.

On my trip I reconnected face-to-face with clients from insurers to pension funds, as well as visiting our strategic partner, the Asian Infrastructure Investment Bank (AIIB), at its new office.

There’s a general acknowledgement that ESG is a government priority, with pressure to integrate ESG factors most keenly felt by those operating in the national interest, such as state-linked pension funds and large insurance companies.

Chinese institutions remain at an earlier stage in their ESG evolution than many global peers, some still unconvinced about the positive impact that ESG integration can have on returns. Chinese retail investors, meanwhile, give no consideration to ESG factors at all – as is the case elsewhere in Asia.

“What struck me was Chinese clients’ appreciation for our work on ESG and our willingness to engage on this topic.”

What struck me above all was Chinese clients’ genuine appreciation for our depth of work on ESG and our willingness to engage on this topic.

There’s a strong desire to learn how overseas asset managers address and incorporate ESG factors into portfolios, and an eagerness to understand how this can improve outcomes for Chinese investors.

It became clear which firms had spent time thinking about this. One bond manager at a large insurer noted how social issues were being given more weight now than environmental or governance factors. He suggested that ESG in China be re-named “SGE” – social, governance and environmental.

My discussions with the China Securities Index provided reassurance about the progress being made to drive greater ESG disclosures. Unfortunately, unlisted bond issuers still remain out of scope, with the focus more on ensuring that labelled bonds deploy proceeds in line with their frameworks.

Reality versus perception

Market developments aside, it was great to be on the ground to see China’s re-emergence from Covid first-hand. Curiously, I noted more people wearing masks in Beijing – perhaps a reflection of greater cautiousness in the capital.

Clearly consumption is rebounding, with restaurants, cafés and bars packed with patrons. Yet retailers in shopping malls – especially high-end ones – were noticeably empty, underling the over-arching impact of the government’s “common prosperity” push and the likelihood that it will be average consumers who power China’s economic recovery.

China is well-known as a cashless society, with one colleague’s initial attempts to pay in cash largely met with bemused faces and, in one instance, a cashier rummaging frantically through a cupboard before emerging victoriously with a cash box.

Years of Covid restrictions – allied to seamless technology adoption and development of mobile apps – have since turned China into a wallet-less society.

None of my colleagues carry wallets or purses; phones have become a one-stop shop covering payment, entertainment, shopping and identification. The stakes are much higher now in ensuring you keep your phone charged – which lies behind the evident increase in phone-charging booths.

Also visibly apparent was the rapid adoption of electric vehicles (EVs) especially in Shanghai, where government policies including free car registration for EVs verses fees for petrol-powered vehicles have boosted demand.

Several EV showrooms are located near abrdn’s Shanghai office, although only Zeekr – the EV subsidiary of Geely – had customers inside. I took the chance to check out its latest offering – a long-range model with a head-turning design, high-quality build and impressive 1,000km range. It retails at Rmb400,000 ($56,000).

Clearly competition in this segment is fierce. By my count the most popular EVs on the road were from BYD and Tesla, followed by Nio. I also saw an autonomous driving vehicle being trialled in the city centre.

Sitting offshore, one might be swayed by international news updates that proclaim the collapse of China’s economy or reports of its rapid reopening. The truth lies somewhere in between.

This trip put some misperceptions to bed and reaffirmed the reality of China’s rebound as well as the potential growth that lies ahead from a technological, economic and market-development perspective.