Recent data from the official Shanghai Stock Exchange ETF WeChat account, "SSE ETF Home," indicates that in 2025, the size of China's domestic ETF (Exchange-Traded Fund) market successively surpassed the 4 trillion, 5 trillion, and 6 trillion yuan thresholds, establishing it as the largest ETF market in Asia.

This milestone achievement reflects the effectiveness of a series of deepening reform measures by regulators and confirms the ongoing optimization of the capital market's structure. Index-based investing is becoming a significant trend in market development.

While acknowledging this success, it is also necessary to maintain an objective and rational perspective. The 61.4% year-on-year surge in the domestic ETF market size in 2025 was closely related not only to an increase in product shares but also to a recovery in net asset values driven by an overall rebound in the capital market. In the long term, China's ETF market still possesses substantial potential and room for improvement in areas such as serving the high-quality development of the capital market, meeting the needs of the real economy's transformation, and addressing investors' long-term wealth management challenges.

From this new starting point of 6 trillion yuan, the domestic ETF market now needs to shoulder a new mission: strengthening its quality.

First, there is a need to continuously optimize the capital ecosystem, shifting the focus from "expanding the size of ETFs" to "enabling ETFs to better stabilize the market." The rapid expansion of ETFs has objectively altered the capital structure of the A-share market. By the end of last year, institutional investors' holdings in Shanghai-listed ETFs had risen to 65%. It is widely believed that an increased institutional presence helps shift the market's operating logic from being driven by sentiment to being led by fundamentals.

However, "institutionalization" does not entirely equate to a "long-term orientation." In practice, due to needs for liquidity management or strategy rotation, if certain institutional investments in ETFs become overly crowded or homogenized, this could potentially amplify market volatility at specific times.

Therefore, the next stage for the ETF market should involve enhancing its role as a "stability anchor" while maintaining the convenience of being a "capital container." This does not negate its trading function but aims, through product design and mechanism optimization, to better align with the allocation needs of long-term capital, such as insurance funds and pension funds. The goal is to guide more capital away from merely "speculating on price differences" and toward "allocating based on value." When the ETF market can accommodate more patient capital that spans market cycles, its function of dampening market volatility will be more fully realized.

Second, improving the efficiency of resource allocation is crucial, moving from "passively tracking the market" to "prospectively mapping industries." Currently, the scale of equity ETFs has reached 3.83 trillion yuan. Index investing is no longer just a tool but is increasingly becoming an important guide influencing resource allocation. Where capital flows often directly impacts the financing environment and valuation logic of related industries.

In reality, there is still a certain "time lag" in how existing index systems reflect industrial changes. Traditional broad-market indices primarily use market-cap weighting, which tends to concentrate capital in mature industries established through historical accumulation. Meanwhile, pioneering hard-tech companies and early-stage enterprises, which represent future directions, may struggle to be included in core index systems promptly due to barriers like market capitalization thresholds.

This suggests that the ETF market can appropriately enhance its forward-looking nature while adhering to the principle of "passive tracking." In the future, through continuous innovation in indices such as the STAR Market series, the CSI A500 Index, and various strategy factors, the index system is expected to more keenly capture trends in technological change and industrial upgrading. This would enable capital to flow earlier and more accurately to areas representing new quality productive forces, thereby improving the overall efficiency of financial services in supporting the real economy.

Third, deepening two-way opening is essential, transitioning from "leading in size" to "continuously enhancing international influence in rules and pricing." Cross-border ETFs have not only broadened the scope for domestic investors' global asset allocation but have also become a vital channel for foreign capital to allocate to Chinese assets, showcasing the phased achievements of financial opening in both directions. Data shows that the scale of cross-border ETFs has now exceeded 900 billion yuan.

However, it should also be noted that global capital allocation to Chinese assets still relies significantly on the product and rule systems of foreign index providers. Continued efforts are needed to promote "Chinese index" standards and enhance the international recognition of domestic ETFs.

Therefore, the development goals for China's ETF market should be more ambitious. On one hand, deepening the connectivity mechanisms and promoting more ETF products based on Chinese rules to enter the international market is crucial. On the other hand, accelerating the cultivation of a domestic index system with international influence is key. When Chinese ETFs serve not just as reservoirs of capital but also as important "pricing anchors" for global investors observing and allocating Chinese assets, the substance behind the "Asia's largest" title will be more substantial.

In summary, the 6 trillion yuan mark represents a milestone in China's economic development and capital market reform. While scale lays the foundation for the market, quality will determine its future stature. When the domestic ETF market can better balance trading and allocation, more precisely connect with industrial upgrading, and more confidently participate in global pricing, its role in providing financial support for Chinese modernization will be more robust and enduring.