China has introduced a series of measures to stabilize its stock markets amid economic uncertainty and rising tensions with the US. The central government issued a directive to increase the amount pension funds can invest in listed companies and encourage firms to increase share repurchases. CSRC Chairman Wu Qing, Deputy Finance Minister Liao Min, and central bank official Zou Lan will hold a briefing on Thursday to provide further details on the new initiatives.
These steps are part of a broader effort to enhance investor confidence and market stability. China will direct medium- and long-term funds, including commercial insurance funds, the National Social Security Fund, and mutual funds, to increase their participation in the stock market. The proportion of these investments will be gradually increased, and a long-term system will be established to track them.
The action plan comes as China tries to navigate uncertainties in President Donald Trump’s second term.
china’s new stock market strategy
On Tuesday, Trump threatened to impose a 10 percent tariff on Chinese exports starting February 1 as a penalty for the flow of fentanyl into the US.
Chinese stocks slipped in the first week of 2025, experiencing their worst start to a year since 2016. Benchmarks in Shanghai and Hong Kong tumbled on the tariff proposal and an investment plan to “beat China” in artificial intelligence. Institutions like mutual funds, pensions, and wealth management divisions at banks will be allowed to participate in share placements as strategic investors under the new policies.
Regulators will implement a performance evaluation for state-backed insurers, with the annual return on equity weighted at no more than 30% of the evaluation. Analysts suggest that China could also announce potential steps to address the possible impact of US import tariffs. Although the 10% tariff level would be below what many investors had initially factored in, worries remain that Trump’s actions could spark an uptick in stock market volatility.
