As tensions rise between China and the United States over trade, China is calling on its biggest financial players — especially major insurance companies — to help steady its stock markets.
The U.S., under President Donald Trump, has threatened to impose an extra 50% tariff on Chinese goods. In response, Chinese leaders are stepping in to keep their economy and financial markets stable.
One key player is Central Huijin Investment, part of China’s massive sovereign wealth fund. This state-owned group is acting as a “market stabiliser,” meaning it’s ready to step in and support the market when things get rocky. To help with this effort, the People’s Bank of China is providing funding tools to make sure Huijin has enough liquidity — or easy access to money — to do the job.
But China’s strategy doesn’t stop there. Regulators have raised the limit on how much insurance companies can invest in the stock market. That’s a big deal, considering China’s insurance industry is the second largest in the world, holding over ¥32.9 trillion (around US$4.6 trillion) in assets.
The industry is healthy too. Its average solvency ratio — which shows an insurer’s ability to pay its obligations — remains strong at 195.6% overall, with property insurers even higher at 206.3%.
In early 2025, Chinese regulators went a step further, directing large state-owned insurers to invest 30% of their new premiums into domestic A-shares (stocks listed on mainland Chinese exchanges). This could push hundreds of billions of yuan into the market every year, helping to cushion any shocks caused by external pressures like U.S. tariffs.
While some experts worry this trade war will hurt both sides, others believe Trump’s aggressive tariff policies are a negotiation tactic. Zurich Insurance’s chief strategist Guy Miller warned that tariffs could backfire, saying they might cause inflation and lower household incomes in the U.S.
Even though the European Union has also been hit with tariffs, it responded by proposing a “zero-for-zero” tariff deal to remove duties on industrial goods. But the U.S. wants more than that — asking the EU to also cut down on non-tariff barriers like VAT and tough regulations.
In short, China is tapping into the power of its insurance giants to help defend its markets, while also preparing for a longer-term battle in the global trade war.
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