The China A-share market has made a strong comeback following years of underperformance. This has ignited investors’ enthusiasm, particularly for ETFs. As of August 25, China’s total ETF assets under management reached 5 trillion RMB, or 700 billion USD, and China has now overtaken Japan as Asia’s largest ETF market. What’s more, the AUM growth rate is accelerating: it took merely four months for total ETF assets in China to jump to 5 trillion RMB from the 4 trillion RMB mark in April 2025, which took around seven months to hit from 3 trillion RMB back in September 2024.
Exhibit 1: China Overtook Japan as the Largest ETF Market in Asia
A few milestones were hit on the back of the robust market advances. The Shanghai Stock Exchange Composite Index, or the SSE Index, reached a closing peak of 3,883.56 points on August 25, marking a decade-long high. The SZSE Component Index – which represents 500 companies traded on the main board of the Shenzhen Stock Exchange, and the ChiNext Index – focused on innovative and technologically-advanced companies, also experienced sharp rallies, with the Shenzhen Stock Exchange’s total trading volume for the day reaching 3.14 trillion RMB, an increase of 595.5 billion RMB compared to the previous trading day. Notably, the total market capitalization of A-shares surpassed 100 trillion RMB for the first time in history.
Exhibit 2: YTD Returns for Major Chinese Stock Market Indexes
Technology-related industries were among the top performing sectors as technological advancements, such as the development and proliferation of AI, drove the market. With this, the respective SWS indexes for telecommunications, electronics, computers, and media have surged over 30% this year as of August 26. Conversely, the high-dividend sectors that were popular over the past couple of years due to their defensive attributes have corrected this year. Among them, the coal industry has been impacted by falling coal prices, resulting in a negative return of 6.03% for its corresponding SWS index year-to-date as of August 26, placing it at the bottom.
Exhibit 3: YTD Returns for SWS Sector Indexes
AI startup DeepSeek’s prowess has investors flocking back to Chinese technology stocks, starting with Hong Kong-listed stocks. The Fullgoal CSI Hong Kong Connect Internet ETF was the most popular ETF in the year-to-date, attracting 40.8 billion RMB, or 5.7 billion USD in inflows as of August 26. The CSI Hong Kong Connect Internet Index tracks the performance of Chinese internet companies listed in Hong Kong and are eligible under the Stock Connect program, including highflyers like photo and video editing app provider Meitu (+298%), film company Alibaba Pictures Group (+183%), and NetEase Cloud Music (+150%). The ICBC CS CNI Hong Kong Connect Technology ETF was also among the 10 most popular ETFs this year so far. Investor fervor expanded to A-shares, with the ChiNext Index gaining 29.55% in the year-to-date as of August 26.
Meanwhile, some Chinese investors preferred the Huaan Gold ETF Fund given gold’s perceived defensiveness as well as its recent price momentum, and the product saw 19.8 billion RMB, or 2.8 billion USD, in inflows. While many view gold as a safe-haven asset, investors should not overlook its volatile nature and the significant drawdowns it has, at times, experienced; its performance profile can differ materially from defensive assets such as fixed income and cash. Read more about gold’s role in an investor’s portfolio here.
The largest ETFs in China tend to track the CSI 300 Index, which consists of 300 largest and most liquid Chinese companies listed in Shanghai or Shenzhen. The largest ETF in China is the Huatai-PineBridge CSI 300 ETF, which stood at 417 billion RMB, or 58 billion USD, as of August 26, 2025, partly thanks to state support, such as Central Huijin Investment. Meanwhile, the ChinaAMC CSI 300 ETF attracted the most inflows among the broad-market tracking ETFs, has attracted strong inflows year-to-date, and stood at 219 billion RMB, or 31 billion USD, as of August 26, 2025.
While equity ETFs continue to dominate the passives landscape in China, fixed income ETFs have been gaining traction. Against the backdrop of prolonged accommodative monetary policy and a five-year bond bull market, investor demand for bond funds has grown steadily. On the supply side, regulators have rolled out supportive measures for fixed income ETFs to boost innovation and availability, aligning supply with strong demand. The HFT CSI Short-Term Note ETF saw with the third-largest inflows year-to-date, with PengYang China bond-30Y Treasury Bond ETF closely following, as investors continue to seek diversified fixed income exposure to fixed-income markets amid macroeconomic uncertainties.
Exhibit 4: Top 10 Most Popular ETFs in China by Fund Flows YTD
In addition to the market exuberance, ETFs in China have benefited from a few structural tailwinds, including various policy support to create a conducive ETF ecosystem, the growing sophistication of domestic institutional investors, and rising retail demand for low-cost, transparent investment tools.
