China’s equity market has staged a dramatic recovery since the policy pivot on September 24, 2024, and veteran economist Ren Zeping has labelled the episode a once-in-a-decade “confidence bull.” Foreign investors have been adding exposure, retail accounts are surging, fund sales have heated up and new retail cohorts — including post-2000s investors — are joining the market. The rally has been broad enough to lift headline indices, shrink bank deposits and reallocate household savings into equities.
Ren points to concrete market moves to support his case: Shanghai’s benchmark recovered roughly 45% from its trough to December 22, while the smaller-board index rose about 108.6% over the same interval. Aggregate A‑share market capitalisation has climbed from around RMB70 trillion at the low to above RMB100 trillion, trading volumes have expanded from a few hundred billion to peaks above RMB3 trillion, and brokerage account openings have jumped sharply. These metrics, he argues, constitute a scale of advance not seen since the previous big bull runs of 2004 and 2014.
The narrative is deliberately historical. Ren frames the 2024–25 episode as the third major Chinese bull market since 2000, following a 2004–07 “cycle bull” and a 2014–15 “reform bull.” Where those earlier cycles were driven by commodity-based industrial investment and structural reform plus liquidity, the current move is led by new‑economy sectors — artificial intelligence, semiconductors, robotics, biotech and defence manufacturing — and is rooted in a renewed confidence that policy loosening will revive growth.
He identifies three mutually reinforcing drivers. First, a marked policy easing that began in late 2024 — including cuts to interest rates and reserve requirements, relaxed housing purchase rules, large‑scale fiscal debt swaps and measures to support private firms — has pushed down risk‑free rates and lifted risk appetite. Second, a fresh global technology wave centred on AI and advanced manufacturing has elevated high‑growth, high‑risk stocks. Third, abundant liquidity inside the banking system and weak real estate demand have displaced household savings into equities, creating a retail‑led bid.
Ren emphasises that the rally is not just a wealth story but serves three strategic missions: to finance the development of “new quality productive forces” (hard tech and strategic industries), to strengthen China’s hand in great‑power technological competition, and to repair household balance sheets that were impaired by a multi‑year property slump. He calculates that the market’s gains have produced tens of trillions of renminbi in wealth effect that could offset much of the decline in housing wealth and spur consumption.
But the endorsement comes with caveats. China’s stock market remains dominated by retail investors and has a history of sharp booms and busts; Ren’s own historical review notes that past A‑share bull markets have been shorter and more volatile than their US counterparts. The current cycle is heavily policy dependent: a durable “long, slow” bull requires sustained monetary and fiscal support, continued protection for private enterprise, and a revival of corporate earnings. Without that, elevated valuations and rising leverage could precipitate an abrupt reversal.
To underpin a lasting recovery Ren proposes a macro strategy he calls “debt big transfer”: aggressive debt relief and reallocation through large‑scale fiscal action and an expanded central balance sheet. Specific measures include a RMB5 trillion+ housing acquisition bank to take on developers’ unsold inventory and land, continued fiscal support for local‑government debt restructuring, and massive investment in “new infrastructure” — AI, chips, industrial internet, green energy and related fields — to generate employment and growth.
For global investors and policymakers the implications are mixed. A sustained Chinese equity boom financed by domestic policy easing would support global demand for technology inputs and may prompt investors to rebalance toward China, particularly if US monetary policy loosens next year. But the scenario also raises questions about the scale of fiscal commitments, the quality of credit reallocation, and whether a market that rallies on confidence rather than earnings can avoid the boom‑and‑bust pattern that has characterised A‑shares.
In sum, Ren offers an optimistic but conditional prognosis: China’s rally is historically large and strategically useful, but its durability depends on continued policy accommodation, structural capital‑market reform and successful execution of debt transfer and new‑infrastructure programmes. Absent those, the “confidence bull” risks reverting into another episodic surge rather than a sustained engine of high‑quality growth.