China’s stock market is defying global anxiety over President Trump’s tariff policies, experiencing robust gains even as Asian peers falter. With key indices like the SZSE Component and CSI 300 rallying impressively, investors are keenly watching this unexpected resilience. This article explores five compelling reasons behind China’s surprising stock market ascent amid challenging global economic conditions.
Global markets have shown significant strain in response to heightened trade tensions under President Donald Trump’s administration, with many Asian indices facing considerable declines. Japan’s Nikkei has slipped by 1.35% year-to-date (YTD), while India’s Nifty 50 and BSE Sensex have suffered losses exceeding 4%. Remarkably, China’s indices have surged, demonstrating impressive immunity from broader market concerns. The SSE Composite Index has risen by over 3.5%, the SZSE Component Index by nearly 9%, and the influential CSI 300 by over 4%.
Market experts attribute China’s market buoyancy to several strategic factors. Firstly, China has become an attractive destination for global portfolio flows, particularly since Trump’s presidency began on 20 December 2024. Investors have shifted capital towards China, buoyed by targeted economic stimulus measures initiated by the Chinese government. These include interest rate cuts, supportive measures for the struggling property sector, and significant liquidity injections designed to stabilise and boost economic confidence.
Secondly, the valuation disparity between Chinese and Indian equities has given rise to a tactical investment shift known as the “Sell India, Buy China” trade. Investors are drawn to China due to the relatively low valuation levels of Chinese equities compared to India’s richly valued market. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, this valuation gap continues to entice investors towards China’s appealingly priced stocks, though he predicts this trade could eventually dissipate as structural challenges in China’s economy persist.
Another influential factor is China’s aggressive economic stimulus package. Designed to counter prolonged policy tightening, these measures have effectively rejuvenated market sentiment. Such proactive policy moves have restored investor confidence, enabling China’s markets to decouple positively from weaker global trends.
Moreover, the rise of DeepSeek, a significant disruptor in the tech industry, is contributing positively to China’s economic outlook. Offering advanced AI-driven technologies at a significantly reduced cost compared to American competitors, DeepSeek has bolstered China’s tech-driven market optimism. Although the long-term impact remains uncertain, the short-term market benefits are clear.
Finally, the strategic shift in foreign institutional investor (FII) flows further highlights China’s current investment appeal. Data indicates substantial withdrawals from Indian equities, amounting to ₹1,12,492 crores in 2025 alone, contrasting starkly with rising inflows into China. Vaibhav Porwal, Co-Founder of Dezerv, pointed out that since October 2024, China’s market capitalisation increased significantly, attracting investors seeking stable returns amidst market volatility.
In summary, China’s proactive economic policies, favourable valuations, tech-sector optimism through companies like DeepSeek, and strategic shifts in global investor sentiment have collectively enabled its stock market to flourish despite global economic uncertainties. China continues to offer investors a compelling opportunity in a challenging international environment.
Fidelity China Special Situations PLC (LON:FCSS), the UK’s largest China Investment Trust, capitalises on Fidelity’s extensive, locally-based analyst team to find attractive opportunities in a market too big to ignore.
