Chinese stocks ripped higher today, as the Chinese government issued its gross domestic product (GDP) target for 2025 and detailed forthcoming stimulus it plans to inject into the country's ailing economy. Hong Kong's Hang Seng index rose 2.8%.
Shares of Futu Holdings (FUTU +1.78%) traded 12% higher today. Meanwhile, shares of GDS Holdings (GDS 0.74%) rose 10%, while shares of New Oriental Education & Technology (EDU 1.72%) were up roughly 6%.
Beijing is projecting a higher budget deficit
In a government report, Chinese officials said they plan to target GDP growth of 5%, which is aligned with the government's medium- and long-term targets. The report also said the government plans to target a deficit-to-GDP target of 4%, which is 1% higher than last year. The deficit would be the largest seen since 2010, according to CNBC.
NASDAQ: FUTU
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China also detailed stimulus initiatives it plans to use to achieve its targets. This, according to CNBC, includes the equivalent of nearly $179 billion in long-term treasury bonds, close to $69 billion of bonds to support large commercial banks in China, and $610 billion of special-purpose bonds to help local governments with financial hardship.
"There's nothing to nitpick. Just a robust growth target, and a clear intention to support the economy," said Vey-Sern Ling, a managing director at Union Bancaire Privee, according to Bloomberg. "This should be reassuring to markets."
NASDAQ: GDS
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Interestingly, the Chinese government also stated in its report that "cooperation will be expanded in the science and technology sector." The report also said the government would "deepen comprehensive reforms for investment and financing in the capital market, encourage the entry of long- and medium-term capital into the market, and strengthen strategic resource reserves and market stabilization mechanisms."
The moves come as China is now in a trade war with the U.S. President Donald Trump's administration recently hiked tariffs on Chinese imports to 20%. While Chinese officials have taken a somewhat softer stance toward the tariffs than in the past, potentially due to the fragile state of China's economy, they are starting to heighten their response as tariffs go into effect.
"China will fight to the bitter end of any trade war," a foreign ministry spokesperson in Beijing said after China announced retaliatory tariffs.
NYSE: EDU
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Stimulus tends to lift the sector
Chinese stocks struggled heading into the year, due to the country's economy dealing with deflationary headwinds and a beaten-down housing market. However, the emergence of DeepSeek and better prospects around the country's artificial intelligence capabilities have lifted the sector so far in 2025. Government stimulus always seems to fuel the sector and the government's continued embrace of the tech sector is also a positive development.
Futu is a digital wealth management and online brokerage platform that allows Chinese citizens and foreigners to invest in stocks on various exchanges in many countries from the U.S. to Hong Kong. GDS Holdings runs data centers in China and other parts of Southeast Asia, and has benefited immensely from the AI trade. New Oriental Education & Technology is an online tutoring company and education platform. Futu and GDS have seen their stocks explode higher over the last year. While their valuations are strong, they still tend to trade at cheaper valuations than some of the large tech names in the U.S.
The ongoing trade war is likely to keep volatility high, but Chinese stocks are starting to show life and could be an interesting place for investors to look for opportunities. That said, China is still dealing with a struggling economy and the government may not achieve its desired 5% GDP target, so if you do invest make sure to take a long-term approach.
