Chinese Stocks a Bright Spot in Global Markets on Growth Prospects

China's stock markets this week outshone most global bourses despite regulatory moves to rein in over-exuberant trading, with investors heartened by news that China achieved its 2025 growth target of 5 percent and prospects are high for that trend to continue.

Geopolitical concerns arising at the World Economic Forum in Davos were offset by AI roundtable discussions there praising China's development of the technology. Among other speakers at Davos, Arthur Mensch, chief executive of Paris-based tech startup Mistral, said claims that China lags the US in artificial intelligence is a "fairy tale."

The benchmark Shanghai Composite Index rose 0.84 percent last week to end at 4,136.16 points. The Shenzhen Component Index gained 1.11 percent, but the tech-heavy ChiNext index dipped 0.34 percent, largely on a 2.1 percent weekly drop by Contemporary Amperex Technology (CATL), the world's largest automotive battery manufacturer, amid forecasts of slowing electric car sales and rising prices of lithium used in batteries.

TCL shares rose after the Chinese electronics and appliance giant said it will partner with Japan's Sony in a new joint venture that will control Sony's home entertainment business. Shares in Moore Threads, a leading Chinese maker of graphics processing units, rallied midweek after the company said it expects its 2025 loss to have narrowed.

"Investors continue to hold a positive sentiment toward China's long-term growth, which was further evidenced by China's 2025 economic data," said Zhang Zhiwei, chief economist at PinPoint Asset Management Co Ltd. "And the geopolitical environment seems to be tipping in favor of China in recent days."

Chinese Vice Premier He Lifeng told the meeting in Davos that the Chinese market will be opened further to correct trade imbalances with other countries and China is a "partner, not a rival" in trade. Warning against global protectionism, he said "the world must not return to the law of the jungle where the strong prey on the weak."

As a reflection of China's strengthening global ties, UK Prime Minister Keir Starmer is scheduled to visit Beijing next week, marking the first trip to China by a British leader since 2018. The visit aims to revive a "golden era" of economic cooperation through a revamped business dialogue. Finland's Prime Minister Petteri Orpo will also pay an official visit in the week. The trips closely follow visits by Canadian Prime Minister Mark Carney and South Korea's President Yoon Suk Yeol. Nvidia Chief Executive Jensen Huang also said he plans a trip to China later this month to smooth the path for use of his company's H200 chips by Chinese mainland AI companies.

"All the changes point to a positive direction for the outlook of China's growth, which will start a new chapter under the 15th Five-Year Plan (2026-2030), where technology will take a central position," Zhang said.

Hong Kong's Hang Seng Index lost 0.36 percent for the week. However, shares in Chinese carmaker Xiaomi rose 2.8 percent after the company announced a HK$2.5 billion (US$320 million) share buyback to demonstrate confidence in the company's long-term business prospects. Shares in Shanghai-based Longcheer Technology closed up 3.6 percent in their Hong Kong trading debut on Thursday after a HK$1.62 billion initial public offering.

Japan's Nikkei dropped 0.17 percent as questions about the country's finances continue amid a snap election called for February 8. South Korea's Kospi managed a gain of 3.1 percent.

In the US, a volatile week of trading whipsawed by Trump administration policies ended with a 0.4 percent weekly loss for the S&P 500 index. The Nasdaq slipped 0.1 percent after a disappointing first-quarter outlook from Intel. Both indexes reported back-to-back weekly losses. In Europe, the Stoxx600 index on Friday closed down 0.09 percent amid continuing tensions in the trans-Atlantic alliance.