However, the Chinese stock market is a key barometer of confidence and a falling market can deter overseas investors.
“It is indicative of investor confidence in China and that filters into business confidence,” Mr Wrigley said.
For the first time on record, overseas investors took more money out of China than they put in last year. Investors pulled $11.8bn out of the country between July and September, according to Goldman Sachs.
Souring relations between China and the West, triggered by Donald Trump’s US-China trade war and heightened by tensions over Taiwan, have not helped. Beijing has also crackdown on the tech sector, in a move that has added to wariness among foreign investors.
“Historically, the stock market in China has been a rollercoaster,” said Mr Wrigley.
In the wake of the global financial crisis, the Communist Party turned to the stock market to boost growth, launching a campaign to encourage citizens to trade as part of the “Chinese dream”.
But the stock market has proven much more volatile than the underlying economy. In 2015, the Shanghai Composite Index lost 30pc over three weeks.
More recently, Xi Jinping has tried to reduce the economy’s dependence on property and infrastructure investments. He has been keen to boost investment in Chinese stocks as an alternative source of growth.
Policymakers are also courting overseas businesses after last year’s investment decline.
HSBC and Standard Chartered were granted a top-tier banking licence by Chinese regulators last week, opening the door to the country’s £13 trillion interbank bond market. The deal was years in the making.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
