China tech shares hint at economic green shoots

China’s gross domestic product (GDP) data is taking a backseat to strong tech company results that some reckon signal better days ahead for Xi Jinping’s mainly underperforming economy.

China’s official data readouts these days can make for sobering reading. Though headline economic growth is progressing, there are few signs of clear and sustainable acceleration as deflationary pressures grab headlines.

Case in point: news on Friday (May 17) that China’s consumer spending lost steam in April, rising just 2.3% year on year versus 3.1% in March.

Industrial production accelerated, though, expanding 6.7% over the same period. The disconnect demonstrates the lopsided nature of Chinese growth and how the economy remains at the mercy of global demand.

“The story of this month’s data is that of prevailing caution by households and the private sector, as retail sales and fixed asset investment came in weaker than expected,” says Lynn Song, chief Greater China economist at ING Bank.

Yet Alibaba Group, Tencent Holdings and other Chinese tech behemoths are presenting a welcome counternarrative of economic green shoots that suggest Beijing’s stimulus efforts are gaining certain traction.

E-commerce juggernaut Alibaba reported its biggest jump in annual growth since 2021 in the first quarter, with net profit up 10%. Gaming giant Tencent, meanwhile, reported a 62% surge in net profit.

Examples abound among other mainland internet platforms, suggesting Beijing’s efforts to achieve this year’s 5% GDP growth target are somewhat working.

They also point to improved confidence that Team Xi is finally serious about ending the property crisis at the root of weak consumer prices and dim investor views of the economy’s prospects.

“From a macro