Geopolitical Risks and Market Resilience: Navigating China's Policy Landscape in 2025

In 2025, the interplay between Chinese regulatory policies and global equity markets has become a focal point for investors. While the Chinese government has largely avoided overt regulatory overreach, its strategic recalibration of economic priorities—rooted in stability, structural reform, and technological self-reliance—has reshaped the investment landscape. This recalibration, however, is not without its complexities. The tension between long-term resilience and short-term volatility, compounded by geopolitical risks, demands a nuanced approach to portfolio management.

The Dual Circulation Strategy: A Pillar of Resilience

China's “Dual Circulation” strategy, emphasizing domestic demand and technological innovation, has gained momentum in 2025. This framework, underpinned by six pillars—industrial upgrading, market governance, social rebalancing, domestic demand, opening-up, and de-risking—has insulated the economy from external shocks. For instance, the government's push for semiconductor self-reliance and AI development has spurred investments in firms like DeepSeek, which now competes globally in cost-effective large language models.

The strategy's success hinges on reducing reliance on U.S. supply chains and diversifying trade partnerships. While U.S.-China trade tensions persist, China's ability to redirect exports to Asia-Pacific and Latin American markets has mitigated the impact of Trump-era tariffs. This diversification, however, is not foolproof. A 60% tariff surge on Chinese goods could still drag GDP growth by 1–1.5 percentage points, according to J.P. Morgan analyses.

Regulatory Reforms: Balancing Stability and Innovation

The Chinese government's 2025 regulatory agenda has prioritized stability over disruption. The introduction of a state-led data governance framework, which treats processed data as intellectual property, has opened new capitalization avenues for tech firms. Shenzhen-based Weiyan Technology, for example, secured a loan using registered data assets as collateral—a first in China.

Yet, compliance with stringent laws like the Personal Information Protection Law (PIPL) and Data Security Law (DSL) has increased operational costs for firms. For trading platforms like Moomoo, which rely on AI-driven analytics, these regulations pose both challenges and opportunities. The platform's commission-free model aligns with government efforts to democratize retail investing, but its exposure to data-intensive operations requires careful risk management.

Fiscal Policy and Market Resilience

A landmark RMB 14.3 trillion debt restructuring plan for local governments has injected stability into the economy. By resolving hidden debt through a combination of one-off resolutions, budget allocations, and deferred payments, the government has freed up resources for infrastructure and housing investments. This has bolstered confidence in onshore equities, particularly in sectors tied to local government spending, such as construction and utilities.

However, offshore markets remain vulnerable. JPMorgan-exposed stocks, especially those in the financial and technology sectors, face heightened volatility due to U.S. trade policy uncertainties. A weaker yuan, driven by trade tensions and current account imbalances, could further complicate the outlook. Historical correlations between U.S. tariffs and CNH depreciation suggest that currency fluctuations will remain a critical risk.

Investment Implications: Hedging and Sectoral Diversification

For investors, the key lies in balancing hedging strategies with long-term positioning. In the short term, allocations to gold, rare earth metals, and energy ETFs can mitigate trade-related risks. Gold, for instance, has surged 25% year-to-date in 2025, reflecting its role as a safe-haven asset.

Long-term opportunities lie in sectors aligned with China's 14th Five-Year Plan. Biopharma, green energy, and AI infrastructure are poised to benefit from policy tailwinds. Firms with localized R&D capabilities, such as those in the Shenzhen Data Exchange, may also gain from the new data governance framework.

Conclusion: A Delicate Equilibrium

China's 2025 policy landscape reflects a delicate equilibrium between stability and innovation. While the government's measured approach has reinforced market resilience, geopolitical risks—particularly U.S. trade policy shifts—remain a wildcard. For platforms like Moomoo and investors exposed to JPMorgan's portfolios, the path forward requires agility. Hedging against short-term volatility while capitalizing on long-term structural reforms will be paramount. As the October 2025 Fourth Plenum approaches, the formulation of the 15th Five-Year Plan will likely shape the next phase of China's economic trajectory, offering both challenges and opportunities for global investors.