Favorable Policies Enhance the Attractiveness of China's Markets
New initiatives aimed at enhancing the business environment are significantly increasing China's attractiveness to investors. These positive policies are designed to foster economic growth and stimulate market confidence. As a result, China is becoming an even more appealing destination for businesses looking to expand their operations and capitalize on emerging opportunities.
TroibNews 
**Editor's Note:** Liu Ming is an assistant researcher in the Department of Economic Forecasting at China's State Information Center. The opinions expressed in this article are those of the author and do not necessarily represent the official stance of CN.
Recently, the Shanghai and Shenzhen stock exchanges hosted symposiums with international institutions to discuss the advancement of comprehensive reforms in the capital market. During these meetings, participants acknowledged that counter-cyclical adjustment policies have successfully enhanced global expectations regarding China's economic prospects and bolstered foreign investors' confidence in the A-share market.
Policy support is essential in influencing market performance. The newly introduced guidelines aimed at strengthening supervision, mitigating risks, and fostering high-quality capital market development, along with the gradual rollout of the "1+N" policy system, have profoundly restructured the foundational systems and regulatory framework of China’s capital market. This progress has cultivated significant confidence in the long-term, stable development of both the capital markets and the broader economy. As of late September of the previous year, net purchases of domestic stocks by foreign institutions had risen, indicating a heightened willingness to invest in RMB assets. Data from the People's Bank of China showed that at the end of September, the value of domestic RMB equities held by overseas entities reached 3.1347 trillion yuan, representing an increase of 657.56 billion yuan from the end of August—a month-on-month rise of 26.5 percent.
In December, the Political Bureau of the CPC Central Committee and the Central Economic Work Conference underscored the need for "more proactive fiscal policy and moderately loose monetary policy" and to "strengthen extraordinary counter-cyclical regulation." The fiscal policy has shifted from "proactive" to "more proactive," while monetary policy transitioned from "prudent" to "moderately loose." This marks a considerable deviation from the previous decade-long strategy of "proactive fiscal policy and prudent monetary policy," indicating a significant shift in macroeconomic policy and a more engaged policy approach.
The positive signals from these policies have bolstered confidence among global investors. Numerous foreign institutions now hold optimistic views regarding the future performance of China's capital market and have raised their ratings on Chinese assets accordingly. In a January 12 research report, Goldman Sachs strategist Kinger Lau and his team project that the MSCI China Index and CSI 300 Index—representing China's core assets—will climb by approximately 20 percent by the year’s end.
The optimism exhibited by foreign institutions will significantly enhance the attractiveness of the Chinese stock market for international investors. Foreign securities funds, QFII institutions, asset management firms, and other foreign entities are not only key players in China's capital market but also act as connectors to global capital markets. Their insights into the A-share market are immensely valuable to global investors.
The influence and discourse power of foreign institutions in the A-share market are considerably greater than their actual capitalization share. Although foreign entities hold less than 5 percent of the circulating market value of A-shares, their investment adjustments and northbound fund flows consistently attract notable interest from domestic investors. By emphasizing value investing and long-term strategies, foreign institutions help steer the A-share market toward more rational and mature investment practices.
Understanding policy implications is crucial in shaping market expectations. Under the supervision of the China Securities Regulatory Commission, the Shanghai and Shenzhen stock exchanges have reaffirmed China's support for foreign investment through these symposiums, reflecting the government's commitment to openness and collaboration.
Furthermore, these dialogues have effectively conveyed the newest policies and their implications to foreign institutions, reinforcing the ongoing appeal and potential of China's market. Such efforts are instrumental in guiding market expectations and bolstering global investor confidence in China's capital market.
Looking ahead to the 2025 national two sessions, where China's top legislative and political advisory bodies will convene, the announcement of specific figures—including the central fiscal deficit ratio, total issuance of ultra-long-term special treasury bonds supporting the "two new" initiatives, and aggregate social financing—will provide further indication of positive policy directions. These measures are anticipated to strengthen international investors' outlook for China's economic future and enhance the global attractiveness of the capital market, potentially drawing in more foreign investments in 2025.
Mark B Thomas for TROIB News
Recently, the Shanghai and Shenzhen stock exchanges hosted symposiums with international institutions to discuss the advancement of comprehensive reforms in the capital market. During these meetings, participants acknowledged that counter-cyclical adjustment policies have successfully enhanced global expectations regarding China's economic prospects and bolstered foreign investors' confidence in the A-share market.
Policy support is essential in influencing market performance. The newly introduced guidelines aimed at strengthening supervision, mitigating risks, and fostering high-quality capital market development, along with the gradual rollout of the "1+N" policy system, have profoundly restructured the foundational systems and regulatory framework of China’s capital market. This progress has cultivated significant confidence in the long-term, stable development of both the capital markets and the broader economy. As of late September of the previous year, net purchases of domestic stocks by foreign institutions had risen, indicating a heightened willingness to invest in RMB assets. Data from the People's Bank of China showed that at the end of September, the value of domestic RMB equities held by overseas entities reached 3.1347 trillion yuan, representing an increase of 657.56 billion yuan from the end of August—a month-on-month rise of 26.5 percent.
In December, the Political Bureau of the CPC Central Committee and the Central Economic Work Conference underscored the need for "more proactive fiscal policy and moderately loose monetary policy" and to "strengthen extraordinary counter-cyclical regulation." The fiscal policy has shifted from "proactive" to "more proactive," while monetary policy transitioned from "prudent" to "moderately loose." This marks a considerable deviation from the previous decade-long strategy of "proactive fiscal policy and prudent monetary policy," indicating a significant shift in macroeconomic policy and a more engaged policy approach.
The positive signals from these policies have bolstered confidence among global investors. Numerous foreign institutions now hold optimistic views regarding the future performance of China's capital market and have raised their ratings on Chinese assets accordingly. In a January 12 research report, Goldman Sachs strategist Kinger Lau and his team project that the MSCI China Index and CSI 300 Index—representing China's core assets—will climb by approximately 20 percent by the year’s end.
The optimism exhibited by foreign institutions will significantly enhance the attractiveness of the Chinese stock market for international investors. Foreign securities funds, QFII institutions, asset management firms, and other foreign entities are not only key players in China's capital market but also act as connectors to global capital markets. Their insights into the A-share market are immensely valuable to global investors.
The influence and discourse power of foreign institutions in the A-share market are considerably greater than their actual capitalization share. Although foreign entities hold less than 5 percent of the circulating market value of A-shares, their investment adjustments and northbound fund flows consistently attract notable interest from domestic investors. By emphasizing value investing and long-term strategies, foreign institutions help steer the A-share market toward more rational and mature investment practices.
Understanding policy implications is crucial in shaping market expectations. Under the supervision of the China Securities Regulatory Commission, the Shanghai and Shenzhen stock exchanges have reaffirmed China's support for foreign investment through these symposiums, reflecting the government's commitment to openness and collaboration.
Furthermore, these dialogues have effectively conveyed the newest policies and their implications to foreign institutions, reinforcing the ongoing appeal and potential of China's market. Such efforts are instrumental in guiding market expectations and bolstering global investor confidence in China's capital market.
Looking ahead to the 2025 national two sessions, where China's top legislative and political advisory bodies will convene, the announcement of specific figures—including the central fiscal deficit ratio, total issuance of ultra-long-term special treasury bonds supporting the "two new" initiatives, and aggregate social financing—will provide further indication of positive policy directions. These measures are anticipated to strengthen international investors' outlook for China's economic future and enhance the global attractiveness of the capital market, potentially drawing in more foreign investments in 2025.
Mark B Thomas for TROIB News
