By Wang Nina
On the first trading day after the Easter holiday, gold continued to hit new highs while U.S. stocks kept declining. Wall Street's confidence has plummeted following Trump's erratic tariff policies in April. Mainstream media described April 21 - the first post-holiday trading day - as the worst April for the Dow Jones Industrial Average since 1932, and the worst performance of the S&P 500 after a president's inauguration since 1928. In short, the Trump administration's capricious tariff policies are pushing the United States into its biggest crisis of confidence since the twentieth century.
When the U.S. subprime mortgage crisis erupted in 2008, causing turmoil in global financial markets, I was studying Monetary Economics and Banking at Lancaster University Management School. During a macroeconomics class, the professor asked students: "If you were to advise on what assets to hold now, what would your answer be?" Students from different countries offered various suggestions. In the end, the professor shared his recommendation: hold Chinese assets.
Seventeen years later, if we were to return to that classroom today, I wonder what the professor's advice would be. Clearly, there are some familiar aspects between the global economic challenges of 2008 and 2025. However, history never repeats itself exactly. The global markets are now experiencing turbulence fundamentally different from the 2008 subprime mortgage crisis. The 2008 crisis stemmed from an internal collapse of the financial system, whereas the 2025 market panic was primarily driven by policy uncertainties (such as trade wars and the politicization of the Federal Reserve).
Gold's safe-haven attributes have become prominent. In both crises, gold reached record highs. The difference lies in the fact that in 2008, the global financial system collapsed, and capital fled risk assets. In 2025, trade wars mixed with geopolitical crises and challenges to the Federal Reserve's independence have caused the traditionally safe-haven U.S. dollar and Treasury bonds to fall simultaneously, leaving gold as the only refuge. The magnitude, duration, and optimistic expectations surrounding gold's rise in 2025 are historically rare.
In 2008, despite the U.S. being the epicenter of the subprime crisis, the dollar remained strong throughout the year, with its status as a safe-haven currency firmly intact. In 2025, the Trump administration's instability in trade and economic policies has created a severe crisis of confidence in the markets, leading to a sharp drop in the U.S. dollar index. Both U.S. stocks and Treasury bonds have faced panic selling, whereas, in 2008, Treasury bonds rose steadily throughout the year, showing a clear negative correlation with stocks.
Amid the 2025 market turbulence, A-shares have demonstrated greater resilience. Although affected by short-term foreign capital outflows, China's vast domestic market, policy toolkit (such as targeted stimulus and capital market stabilization measures), and relatively independent economic cycle have made it more robust compared to 2008. Looking back, although A-shares rebounded quickly in 2008 due to the 4 trillion RMB stimulus plan, China's economic structure at that time was more reliant on exports and thus more vulnerable to the collapse of external demand.
The long-term attractiveness of Chinese assets depends on two core factors. First is policy predictability. While the Trump administration frequently adjusts trade and monetary policies, China has maintained a relatively stable policy framework (such as the continuity of the "14th Five-Year Plan"), making it more appealing to long-term capital. Compared to 2008, when China relied heavily on infrastructure and real estate, the country's current global competitiveness in new energy, advanced manufacturing, and the digital economy has improved, providing structural opportunities for capital markets. Second, by 2025, the proportion of China's consumption and technology industries will have increased, enhancing the endogenous stability of its economy.
Against the backdrop of diminished credibility in traditional safe-haven assets (such as the U.S. dollar and Treasury bonds), Chinese assets are gradually transitioning from the "high-risk, high-return" label typical of emerging markets to a more balanced allocation choice characterized by "stability and growth potential." In the short term, A-shares may serve as a "safe harbor" amid market volatility. In the long run, if China's economic transformation continues to deliver, the trend of global capital increasing allocations to Chinese equities and bonds will become irreversible.
Of course, Chinese assets are not without risks. If U.S.-China friction escalates further, it could suppress foreign capital's willingness to invest. Investors have reacted to Trump's back-and-forth trade policies by dumping U.S. assets, unwinding huge bets they made in recent years on the idea that the U.S. would economically outshine the rest of the world. As investors sell U.S. dollar assets, they recycle them into home currencies, pushing up their value. Hong Kong stocks and U.S.-listed Chinese stocks may still face short-term selling pressure. Although Hong Kong stocks are under pressure, opportunities exist. Due to the linked exchange rate system, Hong Kong stocks are more susceptible to fluctuations in the U.S. dollar. However, with valuations nearing historical lows, any marginal improvement in global risk appetite could make them the first choice for foreign capital returning to the market.
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