There’s good news out of China.

No, seriously. Don’t laugh. Or do laugh, because when you have to reassure an audience you’re not being facetious to herald good news, that tells you a lot about how poorly things must’ve been going.

Here’s the good news: Chinese equities snapped an unprecedented losing streak in 2024, rising for the first time since Xi embarked on what I’ve variously described, including in the latest Weekly, as an ill-conceived social engineering project.

Investors will take it, but it’s important to keep perspective: Mainland shares are still down some 33% from the record highs hit in early 2021, when things started to go off the rails.

Hong Kong-listed Chinese shares did even better, rising more than 25% for the best year since rebounding from the GFC.

The keen among you will immediately note that this is a false optic — it leaves out critical nuance, not least of which is that the entirety of the gains (and then some) in 2024 were attributable to a rip-roaring late-September, early-October “stimmy” rally, fueled in part by state-buying, hot money and generalized hype.

As the figure above reminds you, local shares have gone exactly nowhere since that episode and they were down as much as 8% the week before authorities in Beijing started pushing the stimulus buttons or, more aptly, promising to push them at some indeterminate future date.

Chinese shares meandered sideways once the sugar high wore off, and record inflows to China-focused equity funds in early October quickly turned to outflows (i.e., profit-taking) when officials (predictably) failed to deliver much in the way of specifics around fiscal measures to shore up consumption, which faltered anew in November.

On Wednesday, Bloomberg, citing the ubiquitous “people familiar with the matter,” said the Party handed government workers a meaningful raise this month, the first such pay hike “in years.” The bump amounted to 5% on average, according to the linked article. At the low-end, the dollar amount comes to around $70 per month.

Apparently (and amusingly) the Party tried to play down the wage hikes. Bloomberg briefly documented the experience of a police officer who received around $500 in purported “backpay” this month, odd given that “he wasn’t owed any money.”

Why would Beijing not publicize pay raises for civil servants? That’s a rhetorical question: Likely because the Party doesn’t want to convey a sense of policy panic, and Xi’s wary of instilling a so-called “handout mentality” among the populace.

Meanwhile, PMI data for December came in better than expected. The non-manufacturing gauge printed 52.2, a sharp increase and the first truly decent read since March.

On the manufacturing side, December’s print on the official NBS gauge was 50.1, in expansion territory for a third month, albeit just barely.

I wouldn’t make too much of the readouts. It’s soft data emanating from Xi’s bureaucrats, and it’s not unreasonable to suggest panelists are reluctant to express too dire an opinion on the state of things, lest they should irritate the wrong statistician with the right connections.

Speaking of statisticians, if you ask Zhao Qinghe, a number cruncher at the NBS, December’s PMIs suggest “the economy’s momentum extended a trend of rebounding and improving.” (Ok, Zhao. Thanks.)

For his part, Xi told Chinese on Tuesday that the country will probably meet this year’s 5% growth target. As for 2025, “we grow in wind and rain,” Xi said. “And we get stronger through hard times.”