China's $4.5 Trillion Financial Flows Signal Major Opening - Arabian Post

(MENAFN- The Arabian Post) decoding="async" alt="" border="0" width="320" data-original-height="667" data-original-width="1000" src="https://upload.wikimedia.org/wikipedia/commons/d/d0/4.5_inch_guns_on_Implacable_class_aircraft_carrier.jpg" onerror="this.onerror=null;this.src='https://thearabianpost.com/assets/aparab-news-post.jpg?v3';" />

China has seen financial flows totalling about US$4.5 trillion, a figure that many analysts believe marks a turning point in how its markets are engaging with the world. The scale of cross-border investment-both inbound and outbound-is now surpassing trade in many respects, reflecting Beijing's accelerating liberalisation efforts and a growing confidence among foreign and domestic investors.

The financial sum comprises equity, bond, and other capital movements, and corresponds with recent policy moves designed to reduce restrictions and open up China's capital markets. One key driver is the Stock Connect programme, which allows mainland Chinese investors to purchase eligible Hong Kong–listed stocks and gives international investors access to A-shares. Southbound flows-money moving from mainland China into Hong Kong-have been especially significant, gathering close to US$100 billion within the first half of 2025. That alone matched the total stock in 2024 via that channel.

Yields on Chinese government bonds have hit highs not seen since late 2024, suggesting investors are now demanding greater returns, but also that they perceive risks such as inflation and currency pressures to be easing. The 10- and 30-year yields climbing indicates that institutions expect stabilization in key macro indicators, even if headline economic growth remains uneven. The bond market, however, has also become more volatile, driven by leveraged buying of equities and speculative pressure in certain sectors.

Another contributing factor is the behaviour of domestic institutional investors. With over 160 trillion yuan in household savings, China's policy makers are encouraging pension funds, insurance companies, and sovereign funds to shift more capital into domestic equities. These kinds of flows reinforce the internal market strength, even as external capital enters or exits depending on global risk appetite.

See also China's Energy Transition Gains Momentum Amid Rising Power Demand

Hong Kong's IPO market has benefited greatly. Several major mainland firms-including tech and battery makers-have either listed in Hong Kong or signalled plans to do so. This has helped Hong Kong reclaim its spot among the world's most active IPO hubs in 2025. The changes to listing rules, including shorter approval times for eligible mainland firms, have been essential in this revival.

Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com . We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.

MENAFN12092025000152002308ID1110052469