--- title: Why China’s Reopening Could Be a ‘Ray of Sunshine’ for the U.S. Stock Market description: China's economic reopening will likely have a significant impact on markets across the globe. Here's how it could impact U.S. investors. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ published: '2023-02-10T17:05:10.000Z' modified: '2024-01-10T14:35:05.000Z' section: Economy and Politics tags: - News - stocks word_count: 627 canonical: https://money.com/what-chinas-economic-reopening-means-for-stocks/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Workers manufacture pumps at Wilo Group's Beijing branch company on January 4, 2023 in Beijing, China](https://img.money.com/2023/02/Investing-China-Economic-Reopening-Stock-Market.jpg) After more than two years of strict rules to prevent the spread of COVID-19, China is finally reopening its economy. Experts say the change could have a significant impact on investors across the globe. “This is going to be really important” for markets in the U.S. and around the world, says Callie Cox, U.S. investment analyst at eToro. Cox says the story of China’s reopening will be one about “the balance between global growth and [inflation](https://money.com/inflation-report-stocks-soaring/).” But it may not be smooth sailing for investors. On one hand, a boom in economic activity in China will likely spur growth around the world and help ease the supply chain pressures that have built up since the beginning of the pandemic. On the other hand, the sudden release of all that pent-up demand could push inflation higher. That's because stronger demand for goods, services and raw materials will likely increase prices — especially if supply is limited within China and around the world. In the U.S., that could mean [higher interest rates](https://money.com/fed-interest-rate-hike-february-2023/) for longer, since the Federal Reserve has been hiking rates to bring down spiraling consumer prices. Higher interest rates tend to weigh on the price of financial assets, like stocks. ## China’s reopening will likely spur growth Between significant [losses in the stock market](https://money.com/investor-tips-after-stocks-worst-year/) and continued fears around a possible [recession](https://money.com/how-to-invest-during-a-recession/), investors have had a rough year. But China’s reopening could be “the ray of sunshine making its way through the dark cloud of tightening U.S. financial conditions,” Amit Sinha, head of multi-asset design at Voya Investment Management, tells Money. He says that on the whole, a newly reopened China will be a net positive for the U.S. market. China is one of the world's biggest economies and, before the pandemic, was a top source of international travelers. As supply chain pressures ease, companies will likely see more revenue from Chinese consumers — especially as tourism bounces back**.** ## China’s growth won’t outweigh U.S. market pressure Major geopolitical developments like China’s reopening also bring a significant level of uncertainty. “There are going to be a lot of ups and downs with this,” Cox says, adding that much of that movement could be driven by day-to-day headline news. In the U.S., the stock market is also contending with mounting headwinds that could push stocks lower: Fed Chair Jerome Powell signaled this week that rates could rise more than expected, and it’s still possible we’ll see a [recession](https://money.com/what-recession-would-mean-for-stock-market/) this year. Those local factors “will have a far greater impact on U.S. markets than China’s reopening," Sinha says. ## How to invest as China reopens Because of China’s size and prominence on the world stage, experts say investors should have at least some exposure to China in their portfolios. But investing in international stocks directly can be very complicated. That's why Sinha says “it may be more prudent to look at China exposure more broadly as part of your international exposure, and use index funds or professionally managed international equity funds instead of trying to pick stocks on your own.” And don’t forget: Many of the largest public companies in the U.S. already have significant exposure to China, including “a lot of the popular names that retail investors hold,” Cox says. (Think Amazon, Apple and Microsoft, just to name a few). That means that even if you aren’t investing directly in Chinese stocks, or broadly in [international assets](https://money.com/why-you-should-own-international-stocks/), you’re probably exposed in some way. Cox says dynamics in China could affect the performance of those large U.S. companies. 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