Chinese Stocks Surge on GDP Target and Stimulus Plans

Chinese stocks soared today as the Chinese government announced its gross domestic product (GDP) target for 2025 and outlined plans for economic stimulus to help boost the struggling economy. This led to a significant rise in the Hang Seng index in Hong Kong, which increased by 2.8%.

Shares of Futu Holdings surged by 12%. At the same time, GDS Holdings saw an increase of 10%, and New Oriental Education & Technology saw its shares rise by approximately 6%.

Government Budget and Deficit Projections

In a recent report, Chinese officials indicated a GDP growth target of 5%, which aligns with their medium- and long-term economic objectives. They also mentioned a target for the deficit-to-GDP ratio of 4%, a 1% increase from the previous year. This deficit would mark the largest seen since 2010.

To support these targets, the Chinese government detailed several stimulus initiatives. According to reports, these plans include nearly $179 billion in long-term treasury bonds, about $69 billion in bonds supporting major commercial banks in China, and $610 billion in special-purpose bonds aimed at assisting local governments facing financial difficulties.

Vey-Sern Ling, a managing director at Union Bancaire Privee, commented, "There’s nothing to nitpick. Just a robust growth target, and a clear intention to support the economy. This should be reassuring to markets."

Interestingly, the report also mentioned that the Chinese government would increase cooperation in the science and technology sector and deepen reforms for investment and financing in the capital market. This will likely encourage more long- and medium-term capital to enter the market while fortifying strategic resources and stabilizing mechanisms.

Impact of Stimulus on the Market

The Chinese stock market had faced challenges earlier this year due to deflationary pressures and a struggling housing market. However, improvements in the country’s artificial intelligence sector and the announcement of government stimulus have positively influenced the market's performance so far in 2025. Generally, government stimulus tends to boost the stock market, and the ongoing support for the tech sector has also been encouraging.

Futu is recognized as a digital wealth management and online brokerage platform that enables both Chinese citizens and foreign investors to trade in stocks across various global exchanges. GDS Holdings operates data centers throughout China and Southeast Asia, experiencing significant growth from the AI trend. New Oriental Education & Technology serves as an online education and tutoring platform. Both Futu and GDS have experienced substantial stock price increases over the past year, and despite their strong valuations, they remain cheaper compared to some major tech companies in the U.S.

While the trade war continues to create volatility, Chinese stocks are starting to show signs of life, potentially presenting interesting investment opportunities. However, with the economy still facing challenges, and the government aiming for a 5% GDP growth that may be hard to achieve, a long-term investment approach is advisable.

China, Stocks, GDP, Stimulus, Economy