In January, the Chinese small-cap and micro-cap segments were hardest hit by the economic downturn, largely due to the lack of concrete policy responses to boost business and consumer confidence. Additionally, investor sentiment was further dampened by concerns over the US-China relationship, including the possibility of Donald Trump being re-elected and his comments on imposing more tariffs on Chinese imports.

In December, China's leadership, at the Central Economic Work Conference, stressed high-quality growth and affirmed support for fiscal policies but fell short of specifying targets. Regulatory concerns in the online gaming sector led to a market sell-off, prompting the government to swiftly adjust its stance by approving new game titles and easing industry anxieties. Technology stocks recovered some ground in the following trading days.

In November, Chinese equities experienced positive gains, albeit lagging behind global markets which saw robust rallies amid declining inflation and optimism for a soft US economic landing. Initial enthusiasm from the mid-November meeting between Presidents Biden and Xi waned as little real progress was made despite positive behind-the-scenes developments.