China Growth Outpaces FXI and MCHI Equities

That disconnect is visible in exchange-traded funds tracking China. The iShares China Large-Cap ETF, FXI, closed at $34.84 on Sept. 14, below its 50-day moving average of $35.05 and its 200-day moving average of $36.38. The ETF has bounced repeatedly, but the technical pattern still points to an index struggling to sustain momentum. The KraneShares MSCI China ETF, MCHI, finished at $53.32, also under both its 50-day average of $54.43 and its 200-day average of $57.13. For long-term holders, those levels underscore a familiar story: China can grow quickly in macro terms while equities remain trapped by valuation compression, policy risk and weaker return on capital.

The latest macro backdrop helps explain why the debate is so persistent. China’s export machine remains a bright spot, with August shipments up 25%, driven by high-tech goods and autos. That suggests Beijing is still using industrial policy and supply-chain heft to offset domestic softness. Adalytica’s China growth target sentiment gauge was neutral at 48, while awareness sat at an extreme-fear reading of 4, suggesting investors remain highly cautious even as economic data improve. In other words, the market is not doubting that China can produce growth; it is doubting that growth will accrue cleanly to shareholders.

That skepticism has been costly in names that many global investors use as China proxies. Alibaba closed at $109.23, well below its 50-day moving average of $117.54 and 200-day average of $133.39, after a sharp slide from above $132 in August. The move shows how quickly enthusiasm can fade when policy, competition and earnings visibility clash with the expectation of a structural re-rating. The broader China trade also remains volatile: FXI’s RSI recovered to 40.5 from deeply oversold levels, but the fund is still trading below longer-term trend measures, leaving bulls dependent on follow-through that has repeatedly failed to stick.

The bull case is straightforward: China is still enormous, still industrially competitive and still capable of delivering export-led growth that supports select sectors, particularly technology, autos and commodity-linked businesses. The bear case is more powerful for many investors: that growth alone is no longer enough, because capital allocation, regulation and geopolitical discounting continue to suppress equity multiples. That is why holdings such as Phillips, Alibaba, TSMC and Aramco have often failed to deliver the simple “buy China and wait” outcome many global investors expected.

For investors, the implication is that China remains a tactical market rather than an easy strategic compounding story. Until earnings quality, policy clarity and capital returns improve, the country’s macro comeback may continue to outpace the performance of the funds and multinationals that expose investors to it.