Key takeaways
- Chinese state-backed investors reportedly buy $25.5 billion in stocks
- China's equity market loses $3.5 trillion since May
- Analysts warn government buying cannot repair weak earnings
China's state-backed investors may have poured as much as $25.5 billion into domestic stocks this month, attempting to stabilize a market that has lost approximately $3.5 trillion in value since its May peak.
The buying helped the CSI 300 Index rise 0.9% on Wednesday, October 28, according to the South China Morning Post.
However, investment banks warn that even substantial government intervention may only slow the selloff unless China's struggling economy and corporate earnings begin improving.
China Deploys State Funds as Stock Market Losses Reach $3.5 Trillion
China's so-called national team, a group of state-backed investors including Central Huijin Investment, has reportedly been purchasing exchange-traded funds to support equity prices.
Analysts estimate that these institutions acquired as much as 170 billion yuan, or $25.5 billion, in October.
The purchases represent an estimated intervention rather than a newly announced government stimulus package.
The effort follows one of China's most damaging stock market corrections in recent years.
According to Bloomberg reporting, Chinese equities have lost approximately $3.5 trillion in market capitalization since May.
The CSI 300 recently entered bear-market territory after falling more than 20% from its June peak, extending the weakness Coinpaper covered during the index's October selloff.
The estimated purchases equal less than 1% of the reported market-value decline, although that comparison does not measure their potential influence on trading prices.
AI Stock Collapse Adds Pressure to China's Markets
The market's problems extend well beyond traditional manufacturing and property developers.
Chinese AI and semiconductor stocks have experienced particularly severe losses as investors question whether ambitious growth expectations can translate into profits.
The STAR 50 index has fallen approximately 40% from its summer peak, erasing roughly $480 billion in market value.
Coinpaper recently reported China's AI stock crash, highlighting how expensive valuations and disappointing earnings have undermined confidence.
Some of the sharpest reversals involve companies that previously attracted enormous investor enthusiasm.
Memory-chip manufacturer CXMT, for example, delivered a spectacular 466% IPO debut earlier this year before Chinese technology valuations came under broader pressure.
The selloff has also affected major technology businesses such as Alibaba, whose previous stock rebound illustrated how quickly sentiment can change.
Why Analysts Doubt China's $25 Billion Intervention Will Be Enough
Macquarie and Julius Baer analysts argue that state purchases can reduce market instability but cannot independently restore corporate profitability.
The underlying challenge is weak domestic demand.
According to the Financial Times, China's fixed-asset investment declined 7.2% year over year during the first nine months of 2026, while consumer spending and property-market conditions remained fragile.
Even technology companies expanding aggressively face difficult financial choices.
Alibaba's earlier $10.2 billion AI financing plan demonstrates how expensive the competition for computing infrastructure has become.
Chinese technology shares also face pressure from international competition and restrictions on advanced semiconductor equipment, concerns previously reflected in the global chip selloff.