China’s A-share market has enjoyed a rally in recent months as demonstrated by the Shanghai Stock Exchange ( SSE ) Composite index on August 18 closing at 3,728.03 points, a 10-year high since August 2015, and the Shenzhen Stock Exchange ( SZSE ) Composite index reaching a two-year high.

The SSE and the SZSE indices recorded respective gains of 14.5% and 17.5% year-to-date, both beating that of the S&P 500.

The rallies are supported by an ample supply of liquidity. The trading turnover in the A-share market has seen a sustained increase since August, according to data from Wind, with the daily turnover in the first 12 trading days of August averaging 1.95 trillion yuan ( US$271.4 billion ). Active trading activities have driven the total capitalization of the A-share market beyond 100 trillion yuan for the first time.

China resident bank deposits decreased 1.1 trillion in July 2025, according to the People’s Bank of China ( PBoC ), whereas non-bank deposits increased 2.14 trillion yuan, indicating residents are transferring their banking deposits into other financial products, which partly explains the increased liquidity and the performance elevation in the equity market.

The PBoC reiterates in a recent report that it will maintain a moderately easing monetary policy to sustain the abundancy of liquidity.

The injection of liquidity into the A-shares also comes from offshore investors. The northbound Stock Connect’s average daily turnover for stocks and exchange-traded funds, Hong Kong Exchange data show, reached 202.4 billion yuan in July, a 36.3% increase compared with the previous month.

Increased liquidity reflects investors’ confidence in China’s economic fundamentals. The country’s GDP in the first half of the year secured a 5.3% increase, which was above market expectations.

Despite ongoing China–US trade tensions, both sides reached a provisional agreement during negotiations in Stockholm to extend the suspension of retaliatory tariffs on exports by an additional 90 days through November, which provides a temporary window of stability for trades and financial activities.

The stock market revival, however, is accompanied by a dip in the fixed-income market, with the price of the future contracts on treasury bonds going down and yields picking up. The yield of the 30-year government bond, according to data from China’s Ministry of Finance, on August 18 reached 2.11%.