China's Stock Markets vs. U.S. Markets: An Overview

Since coming to power in 2012, China's President Xi Jinping has preached economic reform as the way to achieve the Chinese Dream. Some of the reform measures are aimed at deepe🔯ning China’s financial markets and giving its stock markets a greater role in financing corporate investment.

Considered home to the deepest financial markets in the world, the U.S. may have just the blueprints for the kind of stock market development the Chinese government is looking tജo foster.

China's stock markets are, after all, much younger. Large by international standards, they're also much smaller than their New York rivals. They're dominated by individual investors, not institutions. And, although times are changing, they have more restrictions on foreign investment.

China's Stock Markets vs. U.S. Stock Markets: The Beginnings

China’s stock markets are relatively young compared t🍒o the U.S. markets.

The 澳洲幸运5开奖号码历史查询:Shanghai Stock Exchange (SSE) dates to the 1860s but it was shut down in 1950 following the Communist revolution and did not reopen until 1990. The 澳洲幸运5开奖号码历史查询:Shenzhen Stock Exchange (SZSE) opened in the same year.

Hong Kong is a special administrative region of the Republic of China. While the 澳洲幸运5开奖号码历史查询:Hong Kong Stock Exchange (HKG) was founded in 1891, it did not list the largest Chinese 澳洲幸运5开奖号码历史查询:state-owned enterprises until the mid-1990s, shortly before it was returned to Chinese control by Great Britain in 1997.

The U.S. Markets

The U.S. stock market is well over two centuries old. The earliest version of the 澳洲幸运5开奖号码历史查询:New York Stock Exchange (NYSE) was launched with the signing of the 澳洲幸运5开奖号码历史查询:Buttonwood Agreement on Wall Street in 1792. It went through several changes before emerging in 1863 under its current name.

Since that time, several other stock exchanges have been established in the U.S. The 澳洲幸运5开奖号码历史查询:Securities and Exchange Commission (SEC) lists 24 registered national securities exchanges. The Nasdaq, established in 1971, remains the second most important exchange after the NYSE.

The Stock Exchanges

The tables below highlight some of the key statistics of the major stock exchanges in China and the United States. All figures are current as of January 2025, according to the World Federation of Exchanges.

Stock Markets' Role in the Economy

Dꦚespite being some of the largest exchange♋s in the world, China’s stock markets are still relatively young and do not play as prominent a role in the Chinese economy as American exchanges do in the U.S. economy.

Further, whereas U.S. companies depend heavily on 澳洲幸运5开奖号码历史查询:equity financing, only a small percentage of total corporate financing in China is funded by equity. Chinese corporations rely much more heavily on bank loans and 澳洲幸运5开奖号码历史查询:retained earnings. There have 📖been recent efforts to rely more on equity financing in China.

U.S. stock market activity is heavily influenced by large 澳洲幸运5开奖号码历史查询:institutional investors. Individual investors, though, are more likely to buy stocks than those in China. Stocks make up a large part of household wealth in the U.S., with roughly 61% of the population investing in equities. Property, 澳洲幸运5开奖号码历史查询:wealth management products, and 澳洲幸运5开奖号码历史查询:bank deposits make up a greater proportion of individual investments in China.

Stock markets play a much larger role in the U.S. economy than in China at both the individual investor and institutional levels. While this means that China’s economy remains relatively protected from disruptive ups and downs in the stock market, it also means that companies are relatively limited in financing opportunities, a factor that can inhibit overall 澳洲幸运5开奖号码历史查询:economic growth. It has a🧜lso led to over-reliance on debt financing.

Stock Markets as a Tool for Economic Growth

The U.S. economy and its stock markets are closely linked. U.S. companies raise money by selling shares in the markets. The economy's strength or weakness affects levels of consumption which in turn affects the performance of companies and therefore the stock market.

China’s stock markets, on the other hand, have been compared to casinos, dominated by unsophisticated retail investors gambling their wealth rather than looking for long-term sound investments.

The influence of retail investors in China’s stock market has been declining over the last two decades with institutional investors' holdings on the rise. In 2003, institutional investors held just 0.95% of China's market capitalization. This rose to over 50% by 2019. Despite this rise, China's markets are still more controlled and influenced by retail invest♋ors than those in the United States.

Studies indicate that increasing the proportion of professional and institutional investors relative to ordinary retail investors helps to improve the quality and efficiency of stock markets. This assumes that professional investors are more adept at analyzing fundamental values and less motivated by fear and 澳洲幸运5开奖号码历史查询:irrational exuberance.

Openness to Foreign Investment

Unlike the U.S. and every other majo🥃r stock market in the world, the Chin𝄹ese markets restrict foreign investment.

In recent years, it has begun loosening the rules a bit. Still, foreign investors hold only a small percentage of Chinese market capitalization. China's total stock market capitalization was about $11.6 trillion in February 2025, with foreign investors holding about $600 billion in Chinese stocks.

🎀 China’s stock shar🐠es are divided into three separate categories:

• A Shares: This class of shares is primarily traded amongst domestic investors on the Shanghai and Shenzhen exchanges, although 澳洲幸运5开奖号码历史查询:Qualified Foreign Inꦿstitutional Investors (QFII) are also allowed to participate by special permission.
• B Shares: These shares are primarily traded by foreign investors in both markets but are also open to domestic investors with foreign currency accounts.
• H Shares: This category of shares is permitted to be traded by domestic and foreign investors alike and is listed on the Hong Kong exchange.

Even though China's stock markets are becoming more open to 澳洲幸运5开奖号码历史查询:foreign investments, international investors remain wary of taking 🥃advantage of Chinese shares. This is largely due to economic conditions in the country, geopolitical concerns, and the restrictions on trading, among other reas𝕴ons.

The Bottom Line

Despite having extremely large total 澳洲幸运5开奖号码历史查询:market capitalizations by international standards, China’s stock markets are still quite young and play a less significant role in the nation's economy than they do in the Uniteꦅd States.

As 澳洲幸运5开奖号码历史查询:equity financing can be a significant factor for economic growth, China has༺ much to gain from fostering further development of its markets. Giving greater access to fo꧅reign investors is a step towards deepening its financial markets, but the main hurdle will be overcoming investors’ lack of confidence. 

Correction—Jan. 30, 2023: A previous version of this article contained incorrect figures for the Hong Kong Stock Exchange. It♕ has been edited to provide the correct market capitalization and number of listed companies.