China’s President Xi Jinping discussed the country’s economic plans after a Politburo meeting. The main focus is on increasing consumption and starting an ‘anti-involution’ campaign, as mentioned in a recent announcement.

Economic Goals for 2025

Although specifics were not shared, we do know the economic focus for the second half of 2025. These goals suggest a strategic path for future economic policies. Given these comments, we can expect a short-term rise in optimism for Chinese investments. The clear push to boost consumption is a strong message that the market has been waiting for, likely leading to a rally in the coming days. This is a good time to consider short-dated call options on China-centric ETFs, like the Hang Seng TECH Index or the CSI 300 Index, to take advantage of the initial excitement. This policy shift is especially important because of the slow economic data we’ve seen in early 2025. Retail sales growth in Q2 was only 2.8%, and consumer confidence is low. Therefore, any effective stimulus will have a big effect. We should look at derivatives related to major consumer brands like PDD Holdings and Alibaba, as they’ll most likely benefit from policies aimed at encouraging spending. The call to address “involution” hints at a broader strategy beyond just temporary measures. This is a direct action against ongoing issues, including the high youth unemployment rate, which remains around 14.5% this year, according to recent data. Hence, we should also consider call options linked to sectors that create high-value jobs, such as advanced manufacturing and domestic technology ETFs.

Market Outcomes and Strategies

However, we must proceed with caution, as we’ve seen similar situations before. At the Politburo meeting in July 2023, comparable promises led to a quick but temporary rally that faded when concrete plans were slow to come. Traders should be ready to take profits from the initial excitement and wait for definite policy announcements before making long-term investments. This sense of anticipation will likely increase implied volatility in Chinese equity options over the next few weeks. The Hang Seng Volatility Index (VHSI) has already started to rise and is expected to climb as the market looks for details. This makes selling out-of-the-money puts a smart strategy for those who are optimistic, allowing them to earn higher premiums while positioning for potential gains. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now