Goldman Finally Admits Why China's Growth Never Reaches Shareholders: Capital Was Too Cheap To Earn Anything

China grew. Its shareholders didn't.

Since Covid, the world's second-largest economy has added some $5 trillion of GDP. Over roughly the same stretch, Chinese stocks have trailed global equities by 110 percentage points. They have fallen 45% from their early-2021 peak (a 63% drawdown peak-to-trough at the worst), and the index P/E has collapsed from 17x to 9.7x. In a new Global Strategy Paper, "What's ailing Chinese profits, and where to find growth?" (available to pro subs), Goldman's Asia strategists led by Kinger Lau and Timothy Moe finally try to explain why. Their answer goes a lot deeper than the usual "involution" talking points:

The Economy Delivered. The Earnings Didn't.