BEIJING, Dec. 31 (Xinhua) -- With 2025 drawing to a close, China's market sentiment is being vividly reflected in an unexpected barometer -- artificial intelligence (AI) search trends. According to Qwen App, Alibaba's AI assistant, stock-related queries ranked highest this year, surpassing questions about relationships, travel and even the meaning of life.
This strong investor interest reflects a broader revival of confidence, with Chinese shares posting a solid rebound this year.
The benchmark Shanghai Composite Index gained 18.55 percent this year, marking its best annual performance since 2019. The market also saw a landmark expansion, with total A-share capitalization exceeding 100 trillion yuan (about 14.23 trillion U.S. dollars) for the first time and the annual trading turnover topping 400 trillion yuan in another historic milestone.
2025 has been a "comeback year" for China's equity market, according to a research note from Allianz Global Investors (Allianz GI), the asset management arm of German insurer Allianz.
A combination of policy support, technological breakthroughs and broader opening up has improved the investment environment and strengthened the appeal of Chinese assets, with the capital markets emerging as both a reflection of the country's economic shift and a key driver of high-quality growth.
REBOUNDING MARKET SENTIMENT
The most obvious change in the market has been the restoration of confidence.
Early in the year, breakthroughs in cutting-edge technologies -- notably, the emergence of AI startup DeepSeek -- helped lift sentiment, triggering a re-rating of Chinese technology stocks and broader assets. In the following months, the market withstood external headwinds, especially U.S. tariff pressures, and rebounded quickly from short-lived pullbacks, sustaining momentum through year-end.
China ranked among the world's best-performing major equity markets this year, said Laura Wang, chief China equity strategist at Morgan Stanley, citing a significant rise in the MSCI China Index.
"A virtuous cycle between capital flows and sentiment is taking shape, reinforcing market resilience and stability," said Yang He, an executive council member of the China Society for Finance & Banking, adding that stock prices rose, trading remained robust, and margin financing recovered steadily.
A series of government measures have played a crucial role in anchoring expectations. State-backed funds increased ETF holdings, while insurers and public funds stepped up long-term equity investments. Reforms to the STAR Market and ChiNext Board expanded financing for innovation, particularly for not-yet-profitable tech firms, and tightened supervision strengthened investor protection and curbed market misconduct.
With ample liquidity and intensive policy support, the market has moved from a structural rebound to a technology-led rally, said Wu Chaoze, an executive at China Securities.
"A more mature, resilient and dynamic capital market is taking shape," said Luo Zhiheng, chief economist at Yuekai Securities.
INNOVATION AS NEW ENGINE
The rise of innovation-driven companies has become a defining feature of this market cycle.
A wave of high-profile tech firm listings, including leading GPU makers Moore Threads and MetaX, alongside IPO preparations at robotics firm Unitree and DRAM producer CXMT, underscored the growing weight of hard technology in capital markets.
Data from financial information provider Wind indicates new market entrants are increasingly dominated by high-tech companies, particularly those related to semiconductors and biomedicine.
While traditional sectors like real estate and coal face profit pressures, emerging industries like AI, new energy and advanced manufacturing are delivering stronger growth in earnings, Luo said, noting that this divergence helps explain why the equity market has performed well despite broader economic headwinds.
Beyond lifting headline indices, the surge in tech firms reflects a deeper structural shift in the economy -- from a structure driven primarily by factor inputs to one increasingly powered by innovation. Increasingly visible in the capital market, this transformation has become a hallmark of the country's pursuit of high-quality development, analysts said.
In 2025, the electronics sector overtook banking to become the largest in terms of market capitalization, and the number of listed firms from strategic emerging industries now accounts for more than half of all listed companies.
"Through the course of this year, it has also become clear that as well as AI, China is also developing fast in a range of other technologies," Allianz GI said. "Some of these are already well-known -- think electric vehicles, high-speed rail and renewable energy. Others, such as battery technology, humanoid robots, and the burgeoning biotech space, have increasingly come on to investor radars this year."
Looking ahead, China will offer stronger support for technological innovation, said Wu Qing, chairman of the China Securities Regulatory Commission, adding that there will be more inclusive rules for IPOs and mergers and acquisitions to address the unique challenges of tech firms with large R&D spending, high operational uncertainty and long profit cycles.
STEADY OPENING UP
While its stock market enjoyed a strong year, China also pushed ahead with financial opening up.
The government has lowered entry barriers for foreign investors, expanded the range of futures and options available to them, and strengthened connectivity between mainland and Hong Kong markets, creating a more transparent, investor-friendly, and efficient market environment.
"The institutional opening up of China's capital markets has made substantial progress," said Tian Lihui, a finance professor at Nankai University. "With lower thresholds and regulatory standards increasingly aligned with global norms, China is becoming a strategic destination for international capital allocation."
According to data from the Institute of International Finance, offshore inflows into Chinese stocks totaled 50.6 billion U.S. dollars from January to October this year, which was a significant increase from 11.4 billion U.S. dollars in 2024.
Global financial institutions remain broadly upbeat. Leading investment banks such as Goldman Sachs, Morgan Stanley and JPMorgan have all issued positive outlooks on Chinese equities in recent months, favoring the technology sector in particular.
"China's vast domestic market, policy tailwinds, and increasingly tech-savvy consumers will drive broader and faster AI adoption, supporting tech stocks in 2026 and beyond," Matthew Quaife, Fidelity International's global multi-asset head, said in a report.
Policymakers have made it clear that capital market reform and institutional development will remain important tasks on China's economic agenda both in the year ahead and over the long term.
Pan Hongsheng, chief economist of the China Institute of Finance and Capital Markets, said that future reforms should align capital markets better with technological innovation to cultivate new quality productive forces.
Tian Xuan, president of the National Institute of Financial Research of Tsinghua University, noted that institutional opening up will be key to strengthening global confidence in renminbi assets.
After more than three decades of reform and development, China's capital markets have entered a critical phase of transformation, Wu Qing said, calling for a new round of reform to push forward high-quality growth, build financial strength and drive Chinese modernization. ■
