A timeline of events in China and their market impacts

By Alek Sawchuk, CFA 9 December 2022 7 min read

In our series on China and its impact on the global economy, we dig into the implications of recent events to help investors better understand this particular region and make informed decisions about their investment portfolio. This information is not intended to encourage or discourage investment in specific geographic regions or specific companies. Similar to all countries, there are risks associated with investment allocation and security selection decisions.

Major Chinese indexes such as the Hang Seng have fallen by almost 17% year to date.1 The Hang Seng index is composed of the largest companies on the Hong Kong stock market, and is commonly quoted to represent broader Chinese equity performance. Zero-COVID policy, the property crisis, manufacturing disruptions, supply chain challenges, heightened global trade tensions and political uncertainty leading up to President Xi securing his third-term in China have all impacted companies worldwide, which in turn can have a significant impact on investment portfolios.

A key step to building a successful investment portfolio is understanding geographic allocation (investing across different regions) while recognizing that market events are outside of your control. Our China Series Introduction conveyed the importance of China as a prominent global trade superpower, boasting the second largest economy in the world. It also covered how broad portfolios hold both direct and indirect exposure to China, which raises geographic risk considerations. For example, an American company like Apple, which manufactures and sells their products in China, can be impacted by protests, riots and US/China trade relations (more on that below). Recognizing this global investment interconnection, we will explore some of the major market events stemming from China that contributed to recent broad portfolio fluctuations.

Major events affecting China's Hang Seng Index Price

Source: Bloomberg

  1. Chinese 5G manufacturing restrictions (2018 through 2020)
    Bans on Chinese 5G wireless network technology used in countries such as the United States and Canada, among other global economies, were under heavy scrutiny as allegations of Chinese vendors using surveillance features escalated the risk of foreign surveillance . Ultimately, this led to a ban of 5G Chinese technology from companies such as Huawei, a major industry player. Instead, countries looked for alternative 5G vendors such as Nokia and Ericsson. The move heavily impacted Chinese 5G technology deployment and smartphone sales and influenced the global value chain for wireless network technologies, forcing companies and countries to quickly pivot to alternative supply sources.
  2. Zero-COVID policy (late 2019 to the start of 2020)
    During this period, China’s zero-COVID policy was seen as a symbol of President Xi JinPing’s platform. President Xi largely staked his reputation on this policy and continues to condone its effectiveness. China was, and remains, hyper-focused on eradicating the virus, which can involve costly city-wide lockdowns, daily testing, app tracking and additional restrictive measures. Throughout the pandemic, China has generally not relied on new vaccine mRNA technology, relying instead on domestic vaccine production. As a result, the country has attempted to limit wide-scale outbreaks between cities since natural “herd immunity” has not developed. These zero-COVID policy measures have suppressed business activity, reduced consumer retail spending, and limited travel and tourism business. 

    1. Zero-COVID policy updated (November 2022)
      China loosened some of its stringent zero-COVID policy related to travel restrictions, testing requirements, quarantine times and close-contact tracing rules.

    2. COVID cases spike to new highs (November 2022)
      The update to China’s zero-COVID policy contributed to a record number of new daily COVID-19 cases. Investors are closely monitoring the possible risks associated with a re-escalation of prior zero-COVID measures.

    3. Protests erupt in China (November 2022) 
      Civil unrest and protests erupted in main areas of China in response to the potential reintroduction of stringent zero-COVID measures. The protests were wide-spread, and disrupted global production at Apple’s main iPhone plant, among other well-known global businesses. The protests raised broader concerns about worldwide supply chain distributions, with global companies such as Apple exploring plans to move production out of China. 

  3. Chinese education measures (May 2021)
    In early March 2021, President Xi said online and after-school tutoring was putting immense pressure on China’s students. Tutoring startups related to online learning businesses were under scrutiny and faced regulations that brought newly listed education platforms to a screeching halt. Many online platforms thrived in periods when students were sent home during the pandemic, but it also created a divide between families that could afford to pay for these support services, leading to increased government intervention and regulation. The end-result was a considerable revenue loss to online learning businesses.

  4. Reforms on Chinese stocks listed in the US (July 2021)
    Beijing increased oversight on Chinese stocks listed on US exchanges in the form of American Depository Receipts (ADRs), the majority of them technology companies. These actions were coupled with restrictions on cross-border data flows and security, and impacted some of China’s most powerful companies such as Alibaba, Tencent and more. The move caused global investors to weigh the higher risk of owning Chinese ADRs, which faced potential delisting from US exchanges as tensions between the US and China rose. 

  5. Property crisis (August 2021-present)
    The fragility of the China real estate market was exposed when the behemoth-sized Chinese property developer Evergrande struggled to make payments on its debt. Its debt payment struggles came after years of aggressive growth financed through debt was followed with slowing demand for its new buildings. 

    1. China introduces “16-point” real estate plan (November 2022)
      In an effort to revitalize and restore balance to its depressed real estate market, China introduced a “16-point plan,” which included key measures such as: a relaxation of lending standards to property developers, extensions on maturing loans, reduction in down payment size and mortgage rates for buyers, and wider developer funding channels through bond issuances. With property developers getting easier access to funding and real estate buyers receiving more favorable terms, some of the earlier real estate investment risks were mitigated. The effectiveness of the plan will be closely monitored by investors.

  6. US-China trade tensions (Pelosi visits Taiwan August 2022)
    US Speaker Nancy Pelosi’s visit to Taiwan in support of democratic independence further heightened the delicate geopolitical tensions between the US and China.

  7. The Biden administration’s semiconductor sanctions (August 2022)
    Western US manufacturing firms have always relied heavily on outsourcing to Chinese firms as a more cost-efficient form of production. China’s self-reliance measures to produce domestically have caused the US to shift towards domestic manufacturing as well. As these cheaper sources of manufacturing and outsourcing have come under pressure, US President Biden’s administration imposed sanctions on critical Chinese industries such as semiconductors. The US pushed to choke off China’s access to critical semiconductor technology (specifically, advanced chips and production tools) related to Chinese military technology advancements. Retaliatory trade measures and outsourcing difficulties add another layer of geopolitical risk for investors.

    1. The Biden administration publishes new rules on Chinese tech restrictions (October 2022)
      An extension of export controls made it more difficult for China to obtain certain types of semiconductor chips, ultimately slowing down Beijing’s technological and military advancements, and heightened tensions between the US and China.

    2. President Biden and Xi Jinping meet at G20 summit in Indonesia (November 2022)
      Investors viewed the meeting between President Biden and President Xi as supportive to ongoing US/China trade discussions, preventing a spillover, which could result in more serious global consequences. However, takeaways from the discussions conveyed that the US and China will “compete vigorously” but are “not looking for conflict,” as Biden stated. President Xi signaled that interference with Taiwan is the “first red line” that must not be crossed. The communication between these two global leaders alleviated some market fears, but future geopolitical action will be closely monitored.

  8. President Xi secures third term (October 2022)
    President Xi secured a third term, with a consolidation of power and leadership team, which will heavily support his agenda and future policies. Investors' general understanding of President Xi’s policies is that they are more focused on data privacy protection, social equality, antitrust and zero-COVID policy as opposed to economic growth and reform. Autocratic self-reliance and national security were paramount components of President Xi’s platform. Some investors have viewed these policies as less supportive to markets and foreign investment.


Looking at this timeline as a whole shows the interconnection between countries. It’s next to impossible to make accurate predictions on future events, how investors will react, and what the market impact will be. The purpose of a well-diversified and global portfolio is its ability to withstand a wide range of policy changes, law-making and other geopolitical events, which will provide the resilient foundation an investor needs to execute their financial plan and achieve their goals. A key step to building this portfolio is being informed about your geographic allocation exposures (direct and indirect) to major global players like China, and recognizing that market events are outside of your control.

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