2025 Outlook for Mainland Chinese Stock Funds: Policy Backing and Economic Robustness, AI and High-End Consumer Sectors Take Center Stage
Since 2025, despite the pressures of trade wars and economic slowdown in the global market, China's A-share market has shown resilience, with the Shanghai Composite Index having decreased by only 1.6% as of April 23. Fund managers and foreign institutions point out that policy support, a robust economy, industrial innovation, and valuation advantages provide support for the market. The AI and high-end consumer sectors have become focal points, and the inflow of foreign capital indicates that international investors are reassessing Chinese assets. In the face of high volatility, it is recommended to invest regularly through a systematic investment plan and pay attention to the impact of US-China trade policies and China's reform progress.
Key Updates
04/24 18:01
2025 Outlook for Mainland Chinese Stock Funds: Policy Backing and Economic Robustness, AI and High-End Consumer Sectors Take Center Stage
Since 2025, despite the pressures of trade wars and economic slowdown in the global market, China's A-share market has shown resilience, with the Shanghai Composite Index having decreased by only 1.6% as of April 23. Fund managers and foreign institutions point out that policy support, a robust economy, industrial innovation, and valuation advantages provide support for the market. The AI and high-end consumer sectors have become focal points, and the inflow of foreign capital indicates that international investors are reassessing Chinese assets. In the face of high volatility, it is recommended to invest regularly through a systematic investment plan and pay attention to the impact of US-China trade policies and China's reform progress.
Policy Support and Economic Resilience: The Foundation of Mainland China's Stock Market Stability
In the first quarter of 2025, China's GDP grew by 5.4% year-on-year, reaching 31.88 trillion RMB, indicating that the economy continues to maintain steady growth amid global uncertainties. According to Sheng Laiyun, Deputy Director of the National Bureau of Statistics of China, this achievement reflects China's gradual shift towards high-quality development and highlights the effectiveness of the policy mix.
On the policy front, the Chinese government continues to promote domestic demand expansion, monetary easing, and fiscal stimulus. The 2025 government work report lists "Artificial Intelligence+" as a key task for the year, clearly supporting the development of large models, smart terminals, and intelligent manufacturing equipment. The low inflation environment also provides more room for policy maneuvers, further strengthening market confidence.
Additionally, the stock-bond yield gap indicator shows the investment value of A-shares is emerging. According to Tsai Tsung-ho, manager of the Jih Sun China Domestic Demand Power Fund, the current stock-bond yield gap of A-shares has fallen below the three-year rolling average by two standard deviations, indicating an increased attractiveness of stocks relative to bonds.
AI and High-End Consumption: The Dual Engines of Industry Sectors
On the industry level, AI and high-end consumption have become the two main focuses of the market. The Chinese government is actively promoting the development of the AI industry, demonstrating determination from policy support to capital investment. According to the "AI Index Report 2024," China has rapidly caught up with the US in AI research, talent reserves, and application implementation, achieving breakthroughs in AI chips, smart manufacturing, and educational applications.
In terms of AI hardware, despite the US implementing high-end chip export controls on China, this has instead accelerated China's localization development. Huawei's recent launch of the 910C AI chip is seen as a domestic alternative to Nvidia's H100 chip, indicating that China's AI industry chain is gradually establishing its independent capabilities.
In high-end consumption, with the expansion of China's middle class and the ongoing trend of consumption upgrading, there is a rising demand for innovative consumer products such as trendy collectibles, AI glasses, and robots. These sectors not only have long-term growth potential but also benefit from policy encouragement for innovation and domestic demand expansion.
Foreign Capital Inflow and Valuation Advantage: International Capital Reassesses Chinese Assets
In the global capital market, the attitude of foreign capital towards Chinese assets is changing. According to statistics, as of April 23, Qualified Foreign Institutional Investors (QFII) have appeared among the top ten tradable shareholders of 82 A-share listed companies, indicating an increased participation of foreign capital in the Chinese market.
International institutions such as Morgan Stanley, Goldman Sachs, and the Abu Dhabi Investment Authority have all expressed optimism about the medium to long-term potential of China's capital market. Neuberger Berman pointed out that Chinese equity assets have a valuation advantage relative to major global stock indices, with low price-to-earnings ratios, offering a cost-effective medium to long-term allocation.
Furthermore, in 2025, China further relaxed the entry threshold for foreign capital, reducing the restricted industries on the negative list from 117 to 106, covering telecommunications, healthcare, logistics, and other fields, demonstrating China's determination to deepen reforms and attract foreign investment.
US-China Trade and Reform Momentum: Key Variables in Market Volatility
Despite the resilience of the Chinese market, US-China trade relations remain an important variable affecting the market. In April 2025, US President Trump announced tariffs of up to 245% on Chinese goods, causing global market turmoil. However, the US subsequently adopted a more conciliatory stance, temporarily suspending some tariffs for 90 days, which the market interpreted as seeking negotiation space.
China, on the other hand, emphasized its readiness to "stand firm until the end," while accelerating domestic demand transformation and technological independence. According to a BBC report, China has shifted export-oriented products to domestic sales and stimulated consumption through policies such as home appliance subsidies and the "Silver Economy," mitigating external impacts.
Zhang Fan, manager of the First Gold China Century Fund, pointed out that high tariffs may impact China's economy by 1% to 2% in the short term, but if this can drive deeper market reforms, it will contribute to China's long-term economic development. This also brings potential structural growth momentum to the mainland stock market.
Investment Strategy: Dollar-Cost Averaging to Cope with High Volatility
Facing high volatility and policy uncertainty, institutions generally recommend participating in mainland stock fund investments through dollar-cost averaging. This strategy helps smooth entry costs and reduce the impact of short-term market volatility on investment portfolios.
Investment trusts point out that the mainland stock market has high volatility characteristics, but with multiple supports such as policy backing, economic resilience, and industrial innovation, it has the potential for medium to long-term value appreciation. By investing in active funds or ETFs and focusing on sectors with growth potential such as AI and high-end consumption, it will help seize market rotation opportunities.
References
People Also Ask...
How does China's AI industry continue growing during the US-China trade war?
How can China's AI industry accelerate the localization of its development and achieve breakthroughs amid U.S. chip restrictions?
What makes artificial intelligence and high-end consumer goods especially attractive on the Chinese stock market?