Three questions on China: policy, equities and US relations

24 November 2025 09:05 1 minutes to read

China, and the country’s relationship with the US, remained the key topic when Eugenia Victorino, Head of Asia Strategy at SEB, recently toured the Nordic region and met many executives at the bank’s customers. Here, she summarises what they talked about.

What is China doing to support its economy?

Beijing is focusing on policies to counter “involution” – a term used to describe declining prices and intense competition. These anti-involution measures aim to improve profitability across industries, but progress is expected to be gradual. Some sectors have already shown signs of improvement, although structural issues, such as overcapacity, remain.

Will the rally in Chinese equities continue?

Yes, according to market observers. The rally is driven by developments in artificial intelligence (AI), particularly in software applications based on open-source AI. Unlike the US, where AI growth is closely tied to infrastructure, China is focusing on productivity gains across various industries. This approach is expected to support a sustained rally in Chinese equities.

What’s the outlook for US-China relations?

The current one-year trade truce between the US and China is set to end during the week of the US midterm elections in November 2026. President Donald Trump has indicated he wants to visit Beijing in April, which suggests relations may remain stable in the short term. While flashpoints are likely, they are expected to be managed, and markets may look past them at least until the elections.