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The People's Bank of China (PBoC) announced a series of monetary policy measures to bolster its economy amid an ongoing trade war with the United States and weakening domestic demand.
The bank cut the seven-day reverse repo rate from 1.5% to 1.40% and lowered the reserve requirement ratio by 50 basis points to 6.2%, injecting approximately 1 trillion yuan ($138 billion) into the banking system. The seven-day reverse repo cut will go into force on Thursday, with the reserve requirement ratio reduction effective from May 15.
Given the stimulus measures, China ETFs like iShares China Large-Cap ETF (FXI - Free Report) , iShares MSCI China ETF (MCHI - Free Report) , SPDR S&P China ETF (GXC - Free Report) , Invesco China Technology ETF (CQQQ - Free Report) and Global X MSCI China Consumer Discretionary ETF (CHIQ - Free Report) are poised to benefit.
The PBoC also announced measures to support financing in several key sectors, including technology and real estate, along with the establishment of a 500 billion yuan relending facility aimed at boosting consumption and elderly care. It will cut the reserve requirement ratio for auto financial companies and leasing firms to zero from the current 5%. The central bank has also slashed the housing provident fund loan rate by 0.25 percentage point and the interest rate on five-year loans for first-time homebuyers from 2.85% to 2.6%.
The move came just hours after China revealed it would hold its first trade talks with the United States this weekend.
China is grappling with a range of economic headwinds. Domestic consumption remains sluggish in the post-COVID landscape, the previously booming real estate sector continues to struggle, and a global economic slowdown has further weakened demand for Chinese exports. The already struggling economy has been further stressed by high tariffs imposed by U.S. President Donald Trump. These tariffs have taken a toll on China’s export-driven industries (read: 5 Country ETFs Up At Least 20% in Q1 2025).
The broad stimulus announcements indicated that officials were responding with increased urgency to support the economy, while the easing depreciation pressure on the Chinese yuan has created more favorable conditions. According to Li Yunze, the head of the financial regulatory administration, China is also preparing additional measures to support small and medium-sized enterprises and the private sector, which will be announced soon.
iShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket with AUM of $5.7 billion and an expense ratio of 0.74%. FXI has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares MSCI China ETF follows the MSCI China Index, holding 563 securities in its basket. It has amassed $5.5 billion in its asset base while charging 59 bps in annual fees. iShares MSCI China ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P China ETF follows the S&P China BMI Index and seeks to provide exposure to the publicly traded companies domiciled in China that are available to foreign investors. It holds 1,151 stocks in its basket. SPDR S&P China ETF has amassed $415.8 million in its asset base and charges investors 59 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook.
Invesco China Technology ETF follows the FTSE China Incl A 25% Technology Capped Index, which includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B-shares. It holds 157 stocks in its basket. Invesco China Technology ETF manages an asset base of $950.6 million while charging 65 bps in fees per year. It has a Zacks ETF Rank #3 with a High risk outlook (read: Are the Good Times Over for China Tech ETFs?).
Global X MSCI China Consumer Discretionary ETF (CHIQ - Free Report)
Global X MSCI China Consumer Discretionary ETF seeks to invest in large and mid-cap segments of the MSCI China Index that are classified in the Consumer Discretionary Sector as per the Global Industry Classification System. It follows the MSCI China Consumer Discretionary 10/50 Index and holds 65 securities in its basket. CHIQ has AUM of $226.2 million and charges 65 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook.
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China ETFs Set to Gain on Easy Monetary Policies
The People's Bank of China (PBoC) announced a series of monetary policy measures to bolster its economy amid an ongoing trade war with the United States and weakening domestic demand.
The bank cut the seven-day reverse repo rate from 1.5% to 1.40% and lowered the reserve requirement ratio by 50 basis points to 6.2%, injecting approximately 1 trillion yuan ($138 billion) into the banking system. The seven-day reverse repo cut will go into force on Thursday, with the reserve requirement ratio reduction effective from May 15.
Given the stimulus measures, China ETFs like iShares China Large-Cap ETF (FXI - Free Report) , iShares MSCI China ETF (MCHI - Free Report) , SPDR S&P China ETF (GXC - Free Report) , Invesco China Technology ETF (CQQQ - Free Report) and Global X MSCI China Consumer Discretionary ETF (CHIQ - Free Report) are poised to benefit.
The PBoC also announced measures to support financing in several key sectors, including technology and real estate, along with the establishment of a 500 billion yuan relending facility aimed at boosting consumption and elderly care. It will cut the reserve requirement ratio for auto financial companies and leasing firms to zero from the current 5%. The central bank has also slashed the housing provident fund loan rate by 0.25 percentage point and the interest rate on five-year loans for first-time homebuyers from 2.85% to 2.6%.
The move came just hours after China revealed it would hold its first trade talks with the United States this weekend.
China is grappling with a range of economic headwinds. Domestic consumption remains sluggish in the post-COVID landscape, the previously booming real estate sector continues to struggle, and a global economic slowdown has further weakened demand for Chinese exports. The already struggling economy has been further stressed by high tariffs imposed by U.S. President Donald Trump. These tariffs have taken a toll on China’s export-driven industries (read: 5 Country ETFs Up At Least 20% in Q1 2025).
The broad stimulus announcements indicated that officials were responding with increased urgency to support the economy, while the easing depreciation pressure on the Chinese yuan has created more favorable conditions. According to Li Yunze, the head of the financial regulatory administration, China is also preparing additional measures to support small and medium-sized enterprises and the private sector, which will be announced soon.
ETFs in Focus
iShares China Large-Cap ETF (FXI - Free Report)
iShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket with AUM of $5.7 billion and an expense ratio of 0.74%. FXI has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares MSCI China ETF (MCHI - Free Report)
iShares MSCI China ETF follows the MSCI China Index, holding 563 securities in its basket. It
has amassed $5.5 billion in its asset base while charging 59 bps in annual fees. iShares MSCI China ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P China ETF (GXC - Free Report)
SPDR S&P China ETF follows the S&P China BMI Index and seeks to provide exposure to the publicly traded companies domiciled in China that are available to foreign investors. It holds 1,151 stocks in its basket. SPDR S&P China ETF has amassed $415.8 million in its asset base and charges investors 59 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook.
Invesco China Technology ETF (CQQQ - Free Report)
Invesco China Technology ETF follows the FTSE China Incl A 25% Technology Capped Index, which includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B-shares. It holds 157 stocks in its basket. Invesco China Technology ETF manages an asset base of $950.6 million while charging 65 bps in fees per year. It has a Zacks ETF Rank #3 with a High risk outlook (read: Are the Good Times Over for China Tech ETFs?).
Global X MSCI China Consumer Discretionary ETF (CHIQ - Free Report)
Global X MSCI China Consumer Discretionary ETF seeks to invest in large and mid-cap segments of the MSCI China Index that are classified in the Consumer Discretionary Sector as per the Global Industry Classification System. It follows the MSCI China Consumer Discretionary 10/50 Index and holds 65 securities in its basket. CHIQ has AUM of $226.2 million and charges 65 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook.