In a stark departure from typical emerging market trends, China’s stock rally has diverged from other developing nations. The surge is largely fueled by the booming tech sector, rather than an overall economic improvement. This distinction suggests a limited spillover effect on global markets. 2024 witnessed China’s tech-driven stock growth reach new heights, surpassing the $4,500 mark and igniting a rally that has left other developing nations stagnant. Analysts attribute this divergence to the reliance on technology advancements rather than robust economic growth. It’s notable that Deepseek, a leading AI model launched in January 2024, played a crucial role in propelling these gains. 2025 data reveals the MSCI China Index surged by over 30%, while other emerging markets outside of China saw losses. This contrasts sharply with past years where both markets experienced simultaneous growth. In 2009-2010, China’s stock market experienced a surge exceeding 63%, while emerging markets soared around 100%. This year, however, Chinese stock gains remain focused on tech, leaving other markets behind. Prior to this, the tech boom began in mid-January with the launch of Deepseek. Other contributing factors include government stimulus measures that took place in September 2024. China’s performance has attracted considerable investments, as evidenced by the $1.5 billion influx into the KraneShares CSI China Internet Fund ETF, while simultaneously experiencing outflows from the iShares MSCI Emerging Markets ex-China ETF. However, a notable divergence between Chinese and global market performance is expected to persist as long as China’s stock gains are sustained by tech advancements. Concerns regarding increasing US tariffs remain a crucial factor in this dynamic, with President Donald Trump imposing 25% levies on auto imports from the country and considering further measures that could impact the stock market. Analysts believe these tariffs could dampen growth and even trigger more losses for emerging markets. Some investors have begun reducing their exposure to China. Notably, Rohit Chopra, a portfolio manager at Lazard Asset Management in New York, has indicated a reduction of Chinese holdings across several funds, citing an underweight position or reduced exposure to the nation’s stock market. 2025 witnessed the emergence of this trend, with Chinese markets experiencing notable growth while other global markets remained stagnant.