China has long wanted global investors' money to bolster the prominence of its domestic stock market. Giving foreigners that access hasn't happened overnight. Why are Wall Street firms still trying?
The big story
Global investment firms are eyeing mainland China not just for its tech stocks, but for the millions of affluent people who could become their clients.
Mainland Chinese with more than $125,000 in bankable assets hold a combined $27 trillion in wealth, according to financial analytics firm Crisil Coalition Greenwich. And the millionaire population has surged — to nearly 4 million, up from 1 million a decade ago.
On the heels of getting Beijing's approval to establish a wholly-owned securities company, Citi's CEO Jane Fraser is kicking off the U.S. bank's annual China conference this week in Shanghai. It's the latest U.S. financial firm to benefit from China's pledge after the Trump-Xi summit in September to approve applications from all foreign financial institutions to operate in the country.
Also headlining Citi's China conference in person is Anna Wintour, former editor-in-chief of Vogue. Condé Nast did not respond to a request for comment.
"The environment is meaningfully more open than it was a decade ago, although it remains highly regulated," said Nuno Cordeiro, head of wealth management, and Fabio Zheng, senior product manager, wealth management, at Crisil Coalition Greenwich.
They pointed out that compared to past years, the property market slowdown has also created greater demand for diversification and advisory services.
"The question today is no longer whether foreign firms can participate. It is whether they can generate sufficient scale and returns within those constraints," they said in an email. "Consequently, most successful strategies combine greater local presence with partnerships that provide access to domestic distribution."
Localization
Franklin Templeton, which oversees $1.8 trillion in assets, and ChinaAMC, which manages over 3.1 trillion yuan ($462.5 billion), signed a strategic partnership on Oct. 28 for sharing market insights and jointly developing products.
They are already working on co-branded ETFs across Hong Kong, U.S. and European fund structures.
The deal goes both ways.
"Just as a lot of international investors [are] interested in China investment, Chinese investors are looking for global investment vehicles," Sherrie Dai, managing director, global capital, at ChinaAMC, told me.
A Hong Kong-listed ETF launched with Franklin Templeton on Sept. 29 holds around 40% U.S. stocks and 60% Hong Kong-listed ones.
Such products could, in six to 12 months, meet Beijing's threshold for letting mainland China-based investors participate, Dai said. Her company is also launching products for investors in Brazil to allocate to Chinese tech companies.
Since early 2025, DeepSeek's AI breakthroughs and other Chinese tech advances have gained foreign investors' attention. U.S.-based Roundhill Investments included China stocks in its thematic ETFs focusing on humanoids, memory chips or other tech — but exposure to mainland-listed names may sometimes come through derivatives.
Performance hasn't helped. Chinese stocks have tumbled this year, significantly underperforming their U.S. peers.
On the China business front, foreign financial firms have also struggled. In late 2025, BlackRock decided to shut down its three-year-old China Innovation Fund, which only had $31.7 million in net assets. Vanguard in 2023 sold its stake in a mainland China mutual fund operator to majority owner Ant Group.
Peter Alexander, founder and managing director of Z-Ben Advisors in Shanghai, attributed part of the challenge to "micromanagement" from headquarters outside China.
"Global groups have failed in China due solely to their inability to make the necessary adjustments to how it is they operate to best fit the Chinese market," he said.
Reducing volatility
Capital controls, a state-dominated system and varying levels of investor communication contribute to a mainland Chinese stock market quite different from that of the U.S.
State-linked funds, known as the "National Team," often step up stock purchases to limit market sell-offs.
Last week, amid reports of a pause in new Chinese IPOs, a senior financial regulator warned in a speech that too much capital concentration in tech can drive up leverage, while crowding out traditional industries.
Such headlines can support short-term stock market gains. But for longer-term investors, who might not be able to buy in immediately, rapid price surges raise the risk that they are "buying at the top," said Liqian Ren, a quantitative manager at U.S.-based fund manager WisdomTree.
High volatility means those investors can only hold a certain amount of Chinese stocks due to perceived risk, she said. The market "becomes a trading vehicle. That's not necessarily good for China."
"Ultimately you need the market to figure it out. You need the punishment to come from the market."
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