（来源：CGTN2025-09-22）
Editor's note:Yang Hangjun is the professor & associate dean at the School of International Trade and Economics, University of International Business and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.
In August 2025, Chinese stocks recorded the largest net purchases in both domestic and overseas markets since September 2024, signaling a decisive and positive return of foreign capital to China. A recent Goldman Sachs report revealed that global hedge funds' gross exposure to China reached a two-year high during the month, underscoring that global investors are once again viewing China as an essential destination for portfolio diversification. Reuters likewise highlighted that China's $19 trillion stock market, once labeled "uninvestable," is steadily regaining the attention of international capital. This shift is driven not only by fresh opportunities in the fast-growing technology sector but also by the practical need of global investors to rebalance portfolios and reduce their concentrated exposure to US assets. Foreign inflows, therefore, are not mere opportunistic trades chasing short-term price swings, they represent a directional move within the broader reconfiguration of global asset allocation.
Strong market confidence and policy efficiency fuel foreign capital flows into China
Looking deeper, the return of foreign capital signifies far more than a temporary warming of market liquidity. It reflects rising international confidence in China's economic resilience and in the growing predictability of its policy environment. This is not an emotional "bottom-fishing" move, but a rational repricing based on improving fundamentals. Over the past year, Beijing has steadily rolled out pro-growth and confidence-boosting policy packages while coordinating fiscal, monetary, and industrial tools to stabilize expectations. Market rules have become clearer and enforcement more consistent, allowing corporate valuations to gradually return to levels that better reflect underlying earnings potential. Companies with healthy cash flow, improving dividend policies, and transparent governance structures are becoming new anchors of value for long-term investors.
Equally important are the structural opportunities that continue to emerge from China's vast innovation landscape. In cutting-edge fields such as artificial intelligence, robotics, new-energy vehicles, energy storage, and industrial software, China combines complete supply chains with rich application scenarios and a demonstrated ability to commercialize breakthroughs at scale. These advantages are driving a virtuous cycle of "technology upgrades-cost reduction-scalable replication," which not only improves corporate profitability but also enhances the long-term growth profile of the broader economy. As these sectors mature, the industrialization path becomes clearer, providing solid fundamental support for renewed foreign inflows.
Three key areas are critical for turning "hot money" into "patient capital"
To transform short-term "hot money" into long-term "patient capital," however, sustained institutional reforms are essential. Three areas deserve particular attention. First, investor-oriented capital-market reforms must deepen. Normalizing dividends and share buybacks, improving disclosure quality, and strictly enforcing delisting rules will help rebuild valuation systems on the basis of sustainable shareholder returns rather than speculative momentum. Second, China should advance rule-based institutional opening by optimizing cross-border connectivity programs, refining tax and settlement arrangements for cross-border capital flows, and enhancing the "investability" of RMBassets so that global investors can hold and trade them with greater confidence. Third, the rule-of-law business environment and property-rights protection need to be further strengthened through full implementation of the "pre-establishment national treatment plus negative list" system, replacing broad policy slogans with clear and enforceable regulations.
Determined reforms and institutional innovation are essential to meet ongoing challenges
At the same time, policymakers and investors must remain clear-eyed about ongoing challenges. Geopolitical frictions continue to create unpredictable spillover effects that can unsettle capital flows. The domestic property market remains in a prolonged adjustment phase, while debt pressures in certain localities and an aging population add structural complexity. Addressing these headwinds will require incremental but determined reforms: improving factor-market allocation, accelerating the construction of a unified national market, enhancing carbon-market and green-finance standards, and closing the "last mile" in technology commercialization to lift total factor productivity through institutional innovation.
Overall, the current return of foreign capital represents both a stage-by-stage affirmation of China's economy after a period of stress testing and a forward-looking bet on its future growth potential. As long as policies continue to stabilize employment, enterprises, markets, and expectations while forging a new synergy of "new narratives, new institutions, and new capital," China's share in global asset allocation is likely to rise further. In this light, today's surge in net purchases is not merely a cyclical uptick but may well serve as the prelude to the next round of high-quality, innovation-driven growth.
附原文链接：https://news.cgtn.com/news/2025-09-22/Foreign-capital-returns-to-the-Chinese-market-1GS8AK6z2Qo/p.html
