Chinese Stock Market Outpacing U.S. Under Trump
Chinese stocks have outpaced their American counterparts in recent weeks, credited to increased optimism in the country’s tech sector and tariff-related volatility in the United States,
Since the day before President Donald Trump’s inauguration, the CSI 300 Index, which tracks the top stocks on the Shanghai and Shenzhen stock exchanges, has risen 5.2 percent. The MSCI China Index, composed of Chinese equities across share classes, has risen nearly 28 percent over the same period, while the Hong Kong-based Hang Seng Index has gained 26 percent.
Meanwhile, major U.S. indexes have continued to struggle. Before markets opened on Wednesday, the S&P 500 was down 6.3 percent, the Dow Jones Industrial Average 4.4 percent, and the Nasdaq composite 10.8 percent since January 17.
Why It Matters
Since Trump’s return to the Oval Office, the administration’s tariff policies and stop-start implementation have contributed to anxiety among American businesses and investors, feeding into significant volatility in the U.S. stock market. As a result, American indexes have fallen behind their Asian counterparts, while European stocks have continued to gain momentum, reversing their long-standing underperformance relative to the U.S.
Combined with indications of declining consumer spending and confidence and pessimistic forecasts from financial institutions, the stock market downturn has heightened concerns that a recession may be approaching in the U.S.
Pedestrians walk by an electronic screen displaying the numbers for the Hang Seng Index in Hong Kong on March 12, 2025.
Hou Yu/China News Service/VCG via AP
What To Know
The Chinese rally has been attributed to the increased promise of the country’s tech sector and has occurred despite broader economic challenges like deflationary pressures and sluggish domestic consumption.
American tech was put on notice in late January when the AI-powered chatbot DeepSeek was launched on the app store. Reportedly more budget-friendly to produce and operate compared to OpenAI‘s ChatGPT, DeepSeek’s entry demonstrated to many the vulnerability of America’s long-dominant tech sector to foreign competition. This resulted in a sell-off for many major stocks, including chipmaker Nvidia and Microsoft and Google owner Alphabet.
As noted by CNBC, Beijing has also unveiled plans to increase funding for its tech leaders, especially in emerging industries such as AI.
China also appears to be gaining ground on its American rivals in other areas. Electric vehicle company BYD is now far outpacing Tesla sales in China while making strides in other areas relative to the EV giant. According to S&P Global, BYD is also currently making a push to expand its access to the European market.
The Hang Seng TECH Index, which tracks the performance of the 30 largest technology companies listed in Hong Kong, has risen 35 percent since the last day of trading before Trump’s inauguration.
What People Are Saying
Investor and portfolio manager Taosha Wang, in a recent Reuters article: “Chinese equities may represent a structural hedge against waning U.S. exceptionalism, transcending cyclic rebounds, given today’s massive geopolitical and technological shifts – from U.S. political volatility to AI democratisation.
“But this is not a zero-sum game. Rather, it reflects a multipolar world where U.S. exceptionalism is no longer the default. The ultimate hedge may lie not in betting against America, but in recognising its primacy as relative, not absolute.”
White House press secretary Karoline Leavitt, in response to suggestions that President Trump bore responsibility for the stock market’s current downturn: “The numbers that we see today, the numbers we saw yesterday, the numbers will see tomorrow are a snapshot of a moment in time.”
Leavitt added: “We are in a period of economic transition. We are in a period of transition from the mess that was created under Joe Biden.”
Richard Harris, CEO of Port Shelter Investment Management, told CNBC: “The U.S. has had a good period, and that’s coming to an end because Trump’s policies are very anti-economy. China has had a very bad period, but it looks as if it’s starting to recover.”
What Happens Next
Some warn that China’s recent strong performance could be short-lived and that its stock market may soon join U.S. indexes in entering correction territory.
Bank of America strategists said that China’s rally could see a “meaningful correction soon,” Bloomberg reported on Wednesday, comparable to the losses witnessed during the country’s 2015 stock market crash.