Beijing/Washington — August 2025 — China’s stock market, valued at nearly $11.87 trillion, is the world’s second largest after the United States. Yet despite its size, it has long struggled to deliver consistent returns — creating a major challenge for Chinese President Xi Jinping and complicating Donald Trump’s economic playbook as trade rivalry intensifies.
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| China’s $11 Trillion Stock Market |
Why Xi Jinping Worries About the Market
For Xi, China’s stock market is a crucial barometer of economic health. Beijing has set a 5% growth target for 2025, relying heavily on domestic consumption to counter weak industrial activity and slowing exports.
But the poor long-term performance of Chinese equities has eroded consumer confidence, restraining household spending. Unlike the U.S., where rising stock portfolios often fuel consumption, Chinese households have become cautious, preferring savings or property investment over stocks.
Coupled with sluggish retail sales, rising youth unemployment, and slowing industrial output, the underperformance of equities poses a direct threat to Beijing’s growth strategy.
Why Trump and U.S. Policymakers Are Concerned
On the U.S. side, former President Donald Trump — eyeing another White House term — views China’s market dynamics through the lens of trade rivalry.
The U.S. has imposed tariff hikes, technology export bans, and investment restrictions on China, pressuring its manufacturing and tech sectors. These measures ripple into Chinese equity markets, exacerbating volatility and sending shockwaves across global trade.
For Washington, China’s stock market instability represents both an economic vulnerability to exploit and a risk factor for global markets. A prolonged slump could deepen trade imbalances, disrupt supply chains, and fuel geopolitical instability.
The Global Implications
For Investors: Weak performance in Chinese equities discourages foreign investment, while capital outflows add pressure on the yuan.
For Consumers: Chinese households remain wary of spending, slowing domestic demand and global trade flows.
For Global Markets: U.S.-China tensions over trade and tariffs amplify volatility, creating uncertainty for businesses worldwide.
Conclusion
China’s $11 trillion stock market is both a symbol of financial power and a source of economic strain. For Xi Jinping, it threatens domestic stability by undermining consumer spending. For Donald Trump and U.S. policymakers, it represents both leverage and risk in an intensifying trade war.
As the world’s two largest economies clash, the fate of China’s equity markets will play a pivotal role in shaping global growth and geopolitical dynamics in the years ahead.
FAQ's
Q1. How big is China’s stock market in 2025?
China’s stock market is valued at approximately $11.87 trillion, making it the second largest globally after the U.S.
Q2. Why is China’s stock market underperforming?
Structural weaknesses, regulatory crackdowns, and weak consumer confidence have kept long-term equity performance poor despite rapid economic growth.
Q3. Why does the stock market matter for Xi Jinping?
Xi relies on rising domestic consumption to meet China’s 5% growth target, but weak stock returns discourage spending and reduce household confidence.
Q4. How does China’s stock market affect the U.S. and Trump?
For Trump, China’s market instability ties directly to trade tensions. U.S. tariffs and restrictions pressure Chinese companies, while volatility impacts global investors and supply chains.
Q5. What are the global risks?
Continued underperformance could deter foreign capital, weaken consumer demand in China, and amplify global market volatility amid U.S.-China rivalry.
