China’s reported $2.5 billion-a-day equity ETF buying spree is raising a bigger question for investors: Could the U.S. Federal Reserve eventually use ETFs to stabilize stocks during the next major market selloff?
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, said China’s government has been buying roughly $2.5 billion in equity ETFs daily since July, following an artificial intelligence-driven market slump. That is about 11.5 times the typical daily ETF flow of $218 million cited by Balchunas. He likened the scale to the U.S. Treasury buying $100 billion of ETFs every day.
Balchunas has previously argued that the Federal Reserve could eventually follow a similar approach, with China and Japan helping normalize government-backed equity purchases. He believes such intervention could become more common over the next five to 10 years.
China’s ETF Purchases Are More Than a Market Signal
China’s state-backed investor Central Huijin Investment has been a key player in the country’s market-support efforts, using ETFs to channel capital into domestic equities.
Bloomberg Intelligence estimates that Central Huijin redeployed $43 billion into equities after purchases resumed in July 2026. It had about $188 billion in available funds remaining, according to Livemint. The buying has included broad-market exposure through funds tracking the CSI 300 Index, alongside greater allocations to technology-focused benchmarks.
However, state buying does not guarantee a sustained recovery. Bloomberg Intelligence has cautioned that intervention may slow a selloff without reversing it when investor sentiment and underlying fundamentals remain weak.
Japan Has Already Crossed That Line
The Bank of Japan built substantial equity ETF holdings through a 2010 program and expanded them during its monetary-easing campaign. In March 2024, it discontinued new ETF purchases.
In September 2025, it announced plans to gradually dispose of its holdings, showing that central-bank equity ownership can become a long-term policy and balance-sheet issue.
Could the Fed Become an Equity ETF Buyer?
A future U.S. intervention would represent a significant departure from conventional Federal Reserve operations. The Fed’s statutory mandate centers on maximum employment and stable prices, not directly supporting stock valuations.
Any move toward equity ETF purchases would raise questions about its legal authority, financial independence, market distortions and the distribution of gains among investors.
For ETF investors, the implication is not that a U.S. rescue is imminent. Instead, China and Japan provide precedents for how governments and central banks might use ETFs to stabilize markets during severe downturns.
The next major bear market could test whether that approach remains largely an Asian policy tool or becomes part of a broader global debate.
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