Chinese stocks saw a notable rise on Wednesday, led by gains in the technology sector, after Beijing made a bold promise to support the industry and set an ambitious economic growth target. This came as the country’s most significant annual political event, the National People’s Congress (NPC), officially kicked off.
The MSCI China Index surged by as much as 2.7%, marking its best performance in a week. This is a stark contrast to the previous five years, where the first trading day of the NPC saw declines. Meanwhile, a gauge of shares listed in Hong Kong climbed 3.1%, with tech stocks rising by 4%.
This upbeat performance followed China’s government setting a 5% growth target for 2025—considered challenging due to escalating trade tensions with the U.S. and ongoing geopolitical instability. The target sparked optimism about further stimulus measures, especially after new pledges to back key technologies, such as AI and quantum computing.
Vey-Sern Ling, managing director at Union Bancaire Privee, remarked, “There’s nothing to nitpick. Just a robust growth target, and a clear intention to support the economy. This should be reassuring to markets.”
Tech Sector Rally
Premier Li Qiang, in his opening address at the NPC, emphasized advancing strategic emerging industries, including the large-scale application of new technologies like biomanufacturing, quantum tech, AI, and 6G. This fueled a rally in Chinese chip, quantum computing, and robotics stocks. Notably, chipmaker Hua Hong Semiconductor Ltd. rose by 7.4% in Hong Kong, while Jiangsu Hengli Hydraulic Co., a robotics company, gained 5.7% in Shanghai. Hong Kong-listed Chinese stocks have now outperformed their mainland counterparts in 2025.
Gary Tan, portfolio manager at Allspring Global Investments, commented, “The NPC report showed better-than-expected government support for the China technology sector while general economic targets are in line with expectations.”
Earlier in the year, Chinese AI startup DeepSeek caused a stir by unveiling technologies that reshaped the global AI landscape, leading to a slump in major Western competitors’ stock prices.
Challenges and Expectations
Despite the strong performance, some investors believe the NPC’s first day lacked any major positive surprises that would drive a longer-term rally. While the growth target and economic plans were largely in line with expectations, the market may be awaiting more impactful measures to counter the trade challenges posed by U.S. President Donald Trump’s tariffs.
Ken Wong, an Asian equity portfolio specialist at Eastspring Investments, noted, “These numbers were largely in line with what we had expected. We will not make any changes to the portfolio till next week when we can fully digest the information.”
Currency and Bond Market Movements
The offshore yuan fell by up to 0.3% against the dollar, as tensions between the U.S. and China continued to linger. Meanwhile, yields on China’s 10-year government bonds dropped by one basis point to 1.75%.
Amid rising trade friction, the Chinese central bank has been taking measures to prevent excessive yuan weakness, including setting the yuan’s reference exchange rate at its strongest level since February 21.
As the NPC continues through March 11, markets are closely watching for more economic details and potential responses to trade challenges.
