Editor’s note: This was written by Kayla Matthews, a freelance writer focusing on technology and online media. You can find more of her work on VentureBeat, MakeUseOf, Motherboard and Gear Diary. 

US stocks—especially tech—have been climbing this year. Facebook, Amazon, Netflix and Google’s parent company, Alphabet, or (FANG), have dominated the US stock market recently.

In fact, American stocks, in general, have been exceeding goals for years. Despite gains like these across various US industries, another country’s stocks—China’s—have surpassed even the some of the biggest in the US tech scene, leaving many wondering what’s behind the surge in the Chinese stock market.

China’s tech stocks growing rapidly

The S&P 500 Tech Index is up by an impressive 23 percent this year, but the MSCI China Information Technology Index more than doubled that gain with an increase of 56 percent.

According to a recent comparison of US and Chinese markets, the three stocks with the most year-to-date growth were Chinese. Momo, a messaging app, saw a nearly 150 percent increase since the beginning of 2017 and over 200 percent growth over the last twelve months.

JD.com saw an 87.1 percent increase in 2017 and over 100 percent growth over the past twelve months. Alibaba, a rival of JD.com’s and a larger company, had growth of nearly 80 percent since the start of this year. Alibaba’s market cap is far behind Amazon’s, however. Alibaba’s is approximately $400 billion while Amazon’s is $478 billion.

For year-to-date percent growth, social media giant Facebook and video streaming service Netflix took the fourth and fifth spots, respectively. Two more Chinese companies, NetEase and Baidu, landed the sixth and seventh largest increases with Apple, Amazon and Alphabet, the parent company of Google, rounding out the list.

Reasons behind the surge

Analysts attribute this immense growth largely to a growing Chinese economy and an increasing popularity of online shopping, which is more popular in China than perhaps anywhere else in the world.

Online sales of physical goods in China grew by 28.6 percent in the first half of 2016 to RMB 2.37 trillion ($350 billion). E-commerce now accounts for 13.8 percent of total retail sales in China. For comparison, US e-commerce sales grew by 14.7 percent to a total of $105.7 billion in the first quarter of this year. They make up 8.5 percent of all of the country’s retail sales.

One potential reason why Chinese tech stocks have outperformed their US counterparts is that Chinese tech companies tend to diversify more than US ones. China-based companies that started out in social media have begun to expand into advertising, like US companies, but also into more diverse areas such as finance and logistics. This diversification provides additional certainty to investors.

This surge in Chinese stock has spawned increased interest from the international community in Chinese tech companies, boosting their status even further. Investors around the world are looking to get in on the next big global tech company as early as they can.

Where is this heading?

These changes in China’s stock market, and increased interest from traders around the world, have led investors to change how they approach Chinese stocks. The volume of options, which provide the right but not the obligation to purchase or sell stock, increased for five of the country’s most important tech stocks. Over the course of about a month, average daily options volume for JD.com increased from 25,606 to a whopping 41,632.

One thing that may be holding the Chinese market back is its reputation for being rather unstable, due mostly to government actions such as regulation changes and investigations into company practices. For example, the State Administration of Press, Publication, Radio, Film, and Television (SAPPRFT) said it would take down the video services of the social media company Weibo in June due to improper licensing. After that news broke, the company’s stock fell by around six percent.

The market’s success demonstrates that China’s efforts to create more consistency in its markets have paid off. The outlook has changed dramatically since 2015 when it switched out its regulator. It has since interfered substantially less in the operation of the market. The result has been more stability.

This could inspire China to continue with this strategy in a bid for even more growth. There have been rumblings, however, that China might turn away from this tactic. Chinese President Xi Jinping recently said that regulators should increase their oversight. This resulted in a dip in Chinese stocks. It remains to be seen how much regulation the government will seek to impose on the market.

TechNode Guest Editors represent the best our community has to offer: insight and perspective on how technology is affecting business and culture in China

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