China’s bull run tests regulators as Beijing aims to guide US$12 trillion stock market
News Summary
China's stock market is experiencing significant gains, challenging regulators' ability to manage its ascent. Beijing's long-term goal is to establish the nation's US$12 trillion equity market as a consistent source of household income, thereby stimulating consumer spending and economic growth. This push comes as the property market remains in a slump, with Chinese investors holding a record 160 trillion yuan (US$22.5 trillion) in bank savings, prompting President Xi Jinping to focus on building a financial superpower through the stock market. Regulators aim to guide a measured but sustainable bull market, akin to those seen in India, Japan, and the US, learning from the wild booms and busts of the past two decades. Steady stock market gains are expected to help redirect household wealth away from the property sector, which accounts for 60% of Chinese families' assets, and boost consumption. Analyst Hao Yifan from Hwabao Securities suggests a transition to a
Background
After two previous rallies in 2024 and 2022 sputtered, China's stock market has seen significant gains in early 2025, with regulators now keen to sustain these advances. This comes against a backdrop of consistent gains in markets like the US, India, and Japan over the last decade, which China aims to emulate. Approximately 60% of Chinese household wealth remains tied to the property market, which has faced significant challenges since 2021. Concurrently, Chinese households have accumulated a record 160 trillion yuan (approximately US$22.5 trillion) in bank savings, a substantial pool of capital seeking alternative investment avenues. The Chinese government has long sought to develop its stock market into a stable mechanism to support economic growth and consumption, a key component of President Xi Jinping's strategy to build a financial superpower.
In-Depth AI Insights
What are Beijing's true underlying motives for guiding the stock market? - Superficially, Beijing aims for the stock market to be a stable source of household income to support consumption and economic growth, especially amid a struggling property market. - A deeper motive is financial stability and social rebalancing. By shifting wealth from the highly volatile property market to a more controlled equity market, the government can mitigate systemic risks and offer a more reliable path to wealth appreciation for ordinary citizens, thus easing social discontent. - This is also a core component of President Xi Jinping's strategy to build a