18 years, zero returns: China’s stock market stuck in time even as Nifty surges 500%
Despite China’s significant economic growth over the past 18 years, investors have not seen corresponding financial gains. Whilst China has established itself as the world’s second-largest economy after the US, its primary stock market indicator, the Shanghai Composite Index, has shown stagnant returns.
The Shanghai Composite, encompassing all Shanghai Stock Exchange listings, remains at levels comparable to early 2007. Similarly, the Hang Seng index, home to prominent Chinese corporations such as Tencent, Alibaba, and Meituan, has demonstrated negligible returns during this timeframe, according to an ET report.
By comparison, the US S&P 500 has risen above 250 per cent whilst India’s Nifty 50 has achieved nearly 500 per cent growth in the corresponding period.
This underwhelming performance is particularly notable considering China’s GDP has more than doubled between 2008 and 2024. Despite recognition for substantial infrastructure development, technological advancement, and export growth, the stock market has not reflected these economic achievements.
Even after the global market recovery following the pandemic, Chinese markets continue to struggle post-Covid crash. The Hang Seng index currently trades at levels equivalent to those witnessed at the 2020 market bottom during the worldwide pandemic impact.
China maintained 6-8 per cent annual economic growth until 2018, subsequently declining to 4.9 per cent in 2024. Initial growth stemmed from exports, industrial production, and foreign investment, whilst post-2018 focus shifted towards technology and consumption-driven expansion. The 2021 property sector decline and increasing debt necessitated interventions, including a 3 trillion yuan bond initiative.
The disappointing returns might be attributed to state economy structural issues. Numerous listed Chinese companies are state-controlled entities, prioritising government objectives over shareholder interests. This approach potentially compromises profit focus and affects investor confidence.
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China’s trade war with US
China’s stock market has been heavily impacted by an escalating trade war with the US under President Trump. The conflict has intensified with reciprocal tariffs—Chinese exports to the US face duties up to 145 per cent, while China has imposed 125 per cent tariffs on American goods. This economic standoff between the world’s two largest economies has triggered global market volatility and fears of a broader economic slowdown.
President Trump stated that talks with China were ongoing and expressed optimism about reaching a favorable deal, citing multiple communication attempts by Chinese officials. Speaking from the Oval Office, he reaffirmed his confidence in a resolution.
However, China has neither confirmed active negotiations nor backed away from its firm stance, instead voicing willingness to endure the trade tension. Beijing has criticized the US for unilateral, protectionist policies and warned against returning to a global system where “the strong prey on the weak,” stressing the need for fair diplomacy.
