(Yicai) Nov. 30 -- China will enter a "new normal" next year of slower, but potentially higher quality growth, in a new world defined by economic uncertainty, geopolitical instability and profound technological change, according to a report released by Swiss banking giant UBS’ Chief Investment Office yesterday.

The Chinese government may set the gross domestic product growth target for 2024 at about 5 percent, the same as this year, and is likely to enhance policy stimulus to aid the economy, Hu Yifan, regional chief investment officer at UBS Global Wealth Management and head of macroeconomics in the APAC region, said at a online press briefing yesterday.

”We see 2024 as marking the beginning of a new world,” said Chief Investment Officer Mark Haefele. “And while it can be easy to feel a sense of trepidation when faced with new challenges, years of adversity reinforce three things in terms of investing – the value of global diversification, the virtue of patience, and, most important, the resilience of humankind.”

China's property investments are likely to tumble between 5 percent and 8 percent next year from this year, which is less than the 9 percent year-on-year drop in 2023, she added.

In the mid- to long run, consumption and the green transition as well as technological innovations and industrial restructuring will become the new 'three engines,' Hu said. There is still plenty of room for China’s middle class to spend more as the country’s per capita expenditure is only one sixth of the US, she said.

Personal healthcare, recreational consumption, the silver-hair economy, e-platforms and payment platforms will all develop swiftly, Hu said. Also, policy makers are increasingly focused on green transition, and green energy, energy storage and electric vehicles will become key forces driving the Chinese economy. Spending on research and development continues to grow and manufacturing is expanding at about 6 percent.

The strength of the US economy this year is likely to give way to slower, though still positive, growth, while Europe should remain subdued, the Zurich-based lender said. Central banks are expected to start cutting rates again next year, and politics will have an outsized role in 2024, with the upcoming US elections and ongoing geopolitical tensions.

Liquidity should be managed by optimizing yields through fixed-term deposits and bonds while quality bonds and stocks with stable balance sheets are needed to ensure both yields and capital appreciation, UBS said. Strategic trading in currencies and commodities are recommended given the anticipated support for the US dollar and oil prices.

Risk mitigation through diversification, capital preservation strategies, alternative investments, and positions in oil and gold are advisable, particularly in the context of geopolitical uncertainties and volatile market conditions influenced by high global debt balances and lower interest rates, it added.

Editor: Kim Taylor