Thematic, China China 360: Tracking the themes that matter

In the past year, UBS has addressed a wide range of themes to help analyze China's rapidly evolving landscape, from globalization, to automation, innovation, and consumption. In this report, we recap 15 China trends UBS analysts are tracking along with related datasets from UBS Evidence Lab: 

1. Chinese investing abroad
2. tech decoupling
3. autonomous driving
4. smart infrastructure
5. green finance
6. energy transition
7. EV battery chemistry
8. robotics
9. Greater Bay Area
10. Little Giants
11. livestreaming
12. lower-tier city consumers
13. property deleveraging
14. demographics; and
15. the future of farming

With China's Covid policy easing and the border reopening, everyone is wondering what 2023 has in store.

Our analysts explored the potential of Chinese outbound financial investments; the increasing politicization of tech from exports restrictions and re-shoring; autonomous driving and how it could be accelerated by US$300bn of smart infrastructure; and China's Rmb70trn-plus green finance market.

Working with the UBS Empirical Scientific Approaches team, our Global EV Battery and Materials teams analyzed US/China regulatory filings on 655 EV models to predict the impact of battery technology advances on vehicle range/cost. 

We explored the transformation in the Greater Bay Area (GBA) from manufacturing to innovation. UBS China Equity Strategy team forecast that the GBA's nominal GDP will exceed US$2.6trn by 2025, a 7.5% CAGR from US$1.7trn in 2020.

We examined technological advances by domestic collaborative robot makers and medical robots. We also dove into how livestream is reshaping the mainstream and into the preferences of consumers in lower tier cities.

China does face many challenges. UBS analysts studied the implications of deleveraging in the property sector, and how changing demographics could lead to an Rmb87trillion pension deficit. In the recent Q-series: "Future of Farming: will we grow enough food?", UBS analysts hypothesize how scenarios might play out over a 10-30 year period. They highlight that GM commercialization in China will be likely in the coming years and recent government policies suggest the country is heading in that direction.

Our Economics team see consumption recovery and property stabilization as the key macro themes, and expect economic activities and consumption to rebound strongly from March-April 20223.

Our China Equity Strategy team think that faster than expected return to normalized activities, underpinned by policy support, stronger earnings growth vs other regions this year and undemanding valuation, could see outperformance from the China equity market.