After delivering solid growth in the first quarter of 2021, China's focus on increasing its economic output by implementing comprehensive policies should boost its GDP further in the coming quarters. Given this backdrop, small-cap Chinese stocks LexinFintech (LX), GreenTree (GHG), Cango (NYSE:CANG), and Qudian (NYSE:QD) are expected to generate robust returns in the near term despite current regulatory concerns. Let’s discuss.As the world’s largest internet market, China has witnessed the rapid digitalization of various businesses during the pandemic. And it is the first country to recover from the pandemic-driven global recession. The country’s GDP increased 18.3% year-over-year in the first quarter of 2021.
To maintain this growth, China has announced plans to increase its R&D spending by 7% between 2021 - 2025 in its five-year plan draft. The IMF has forecast an 8.4% growth projection for China in 2021, compared to 6.4% for the United States. However, a recent Chinese crackdown on Chinese companies’ U.S. listings is a cause for concern.
Despite the regulatory headwinds, we believe small-cap Chinese stocks LexinFintech Holdings Ltd. (LX), GreenTree Hospitality Group Ltd. (GHG), Cango Inc . (CANG), and Qudian Inc . (QD) have the potential to deliver solid upside in the coming months.