This aerial photo taken on Jan. 31, 2023 shows vehicles to be delivered at a parking lot of the FAW Jiefang in Changchun, northeast China's Jilin Province. [Photo/Xinhua]

China's economy started the year of 2023 with a bang. Bustling streets and humming factories all have signaled the world's second-largest economy is set to see a faster-than-expected recovery this year.

"Global investors are pouring money into funds that track Chinese stocks," The Wall Street Journal (WSJ) wrote in a report on Feb. 14.

Investment trends often herald the direction of the economy. Being optimistic about the opportunities brought by China's strong revival, and believing the country will continue to power global economic growth, global investors have taken concrete actions to show their confidence in China's economic prospects, observers have said.

Attracting foreign investment

Investors have added more than 2 billion U.S. dollars on a net basis this year to U.S.-based mutual and exchange-traded funds that buy Chinese equities, according to data from Refinitiv Lipper. That marked five consecutive weeks of inflows, and coincided with an exodus from U.S.-focused stock funds.

The MSCI China Index, which tracks Chinese companies listed in the United States, Hong Kong and the Chinese mainland, has climbed about 45 percent from its trough last October. And Goldman Sachs also sees a potential 24 percent hike to the MSCI China Index by the end of 2023.

According to the February Bank of America Global Fund Manager Survey, 21 percent of respondents said they believe the bullish position on Chinese stocks is the current most crowded trade. And "long China equities" have dethroned "long U.S. dollar."

"The growth story on a relative basis is more appealing in China and parts of Asia than it is in the United States," Jason Draho, head of asset allocation Americas of UBS Global Wealth Management, was quoted by the WSJ as saying.

"China stocks draw record foreign buying" after the country optimized and adjusted the COVID-19 prevention and control measures, Nikkei Asia reported in early February.

Global investors like Appaloosa Management have bought more China concept stocks, while shares of some multinationals such as Volkswagen AG and Apple Inc. that do significant business in China have seen an uptick as well.

Foreign investors have been eager to seize the opportunities of China's economic recovery.

According to the Ministry of Commerce, the foreign direct investment (FDI) into the Chinese mainland, in actual use, expanded 14.5 percent year on year to 127.69 billion yuan in January. In U.S. dollar terms, the FDI inflow went up 10 percent year on year to 19.02 billion dollars.

"We have every reason to (be) confident, indeed optimistic, on the Chinese market," French billionaire Bernard Arnault, the CEO of luxury goods maker LVMH, said on a recent conference call, according to a CNN report.

Accelerating economic revival

The Chinese market has been highly prized by foreign investors, as the factors for China's economy to grow continue gathering. The world has seen a flying start of the Chinese economy and smelt a rapid revival in the vast Eastern Asian country, experts have said.

The purchasing managers' index for China's manufacturing sector came in at 50.1 in January, returning to expansion after three consecutive months of contraction. That indicated market optimism is increasing.

During China's weeklong Spring Festival holiday that ended on Jan. 27, the revenue of domestic tourism hit 375.8 billion yuan (54.3 billion dollars), up 30 percent from the holiday last year. The combined revenues of major retail and catering businesses rose 6.8 percent from the last Spring Festival holiday.

And China's cinema box office raked in 6.76 billion yuan (nearly 1 billion dollars), the second-highest gross figure for the annual holiday.

"China's economic activity accelerated in February as many residents returned to work after an extended Lunar New Year break, clogging roads in major cities and spending more at restaurants and shops," Bloomberg reported, citing that UBS Group AG's latest China consumer survey also showed an increase in dining out, shopping in stores and offline entertainment.

The Chinese economy has become a spotlight in the world economy, and international institutions are widely upbeat about China's growth prospects.

The International Monetary Fund in January projected that China's economy will grow by 5.2 percent in 2023, 0.8 percentage points higher than its October 2022 forecast.

Credit rating agency Fitch Ratings revised its forecast for China's economic growth in 2023 to 5 percent from 4.1 percent. Bank of America and Morgan Stanley also raised their forecasts to 5.5 percent and 5.7 percent, respectively.

Powering global growth

China's role as "a major engine of global growth" has not changed, many observers and institutions have said, expressing their belief that the rebounding Chinese economy will achieve high-quality development and inject new momentum into the world economic recovery.

China's super-sized market has been providing steady demand for the world economy, with its total trade of goods up 7.7 percent year on year in 2022, topping the world for six consecutive years. And its imports in 2022 went up 4.3 percent to 18.1 trillion yuan (2.62 trillion dollars).

Khairy Tourk, professor of economics with the Stuart School of Business at the Illinois Institute of Technology in Chicago, the United States, sees momentum in the Chinese economy.

When advanced countries might suffer from deep recession, "only China is the country that will continue to be a major engine of global growth," said Tourk, citing the advantages of China's first-class infrastructure, high-quality workforce and huge market.

After a three-year hiatus caused by the COVID-19 pandemic, China's outbound group travels have pressed the "restart button," and the first batch of Chinese tourists have arrived in Thailand, Cambodia and the United Arab Emirates, among others.

According to a forecast of the UN World Tourism Organization, an orderly restoration of outbound travels will greatly promote the recovery of tourism in the Asia-Pacific region and even the whole world.

China's adjustment of its COVID-19 pandemic response will not only speed up its own economic recovery, but also boost global economic growth, said a report issued by Goldman Sachs Research on Feb. 10.

"The global growth backdrop has brightened," Goldman economists Joseph Briggs and Devesh Kodnani were quoted as saying by the report.

Briggs and Kodnani "anticipate the broader spillover effects from Chinese growth -- including more favorable global financial conditions and increased trade with other countries -- to be larger," said the report.