China Stocks Rise Despite Trump’s Threat of 50% Tariff on Imports

Chinese equities bounced back modestly on Tuesday, shaking off renewed trade war fears triggered by former US President Donald Trump's latest threats. The Shanghai Composite Index climbed 0.6% to close near 3,115, while the Shenzhen Component Index edged up 0.45%, ending around 9,400.

This upward move comes despite mounting global concerns over a potential escalation in the US-China trade conflict.

Trump Escalates Trade Pressure with New Threats

In a statement that rattled international markets overnight, Donald Trump warned that the US could slap an additional 50% tariff on Chinese goods unless Beijing withdraws its existing tariffs on US products.

Trump’s remarks, seen by Beijing as "blackmail," were met with strong resistance from Chinese officials.

• A spokesperson from China’s Ministry of Commerce condemned the threat, saying China would "fight to the end" to protect national interests.

• The diplomatic exchange rekindled memories of the earlier trade war, which had disrupted global supply chains and market confidence.

Despite the rising tensions, Chinese stock indices managed to stay in the green, suggesting investor confidence in domestic policy support.

PBOC Reaffirms Market Support Amid Tensions

The People’s Bank of China (PBOC) played a pivotal role in soothing market nerves.

• The central bank pledged support to a sovereign fund, which is reportedly buying stocks to bolster confidence in domestic markets.

• A PBOC official stated, “We are prepared to assist the fund if needed,” signaling a strong commitment to market stabilization.

Analysts believe the move is designed to signal resilience and prevent panic selling as trade-related headlines dominate news cycles.

Strong Gains in Domestic Heavyweights

Investor sentiment was also lifted by rallies in key Chinese companies, particularly in consumer and tech sectors.
Notable gainers included:

• East Money Information Co. surged +3.1%, supported by optimism around fintech innovation.

• Contemporary Amperex Technology Ltd. (CATL) gained +2.5%, with EV supply chain demand staying robust.

• Kweichow Moutai, China’s flagship liquor producer, rose +1.1%, rebounding from recent lows.

• Yonghui Superstores jumped a staggering +10%, making it the session's top performer on strong retail sales growth.

• Zijin Mining added +2.2%, aided by higher global gold and copper prices amid geopolitical jitters.

Mid-cap and retail-heavy names led the broader market recovery, outshining export-focused firms that remain vulnerable to trade restrictions.

Broader Market Outlook: Fragile but Stabilizing

Despite the daily gains, market analysts remain cautious:

• The Nifty IT and global tech-heavy Nasdaq indices have both faced sharp corrections recently, reinforcing how global markets remain reactive to macroeconomic news.

• China's long-term equity outlook depends on the resolution of trade frictions and continued domestic stimulus measures, especially from the PBOC and state-backed funds.

In light of Trump’s aggressive posturing, further retaliatory steps from China cannot be ruled out. However, Beijing’s measured fiscal and monetary policy response seems designed to counterbalance external shocks and keep market volatility under control.

Conclusion: Domestic Confidence vs. External Headwinds

Tuesday’s stock rally demonstrates that China’s markets can still attract buyer interest, even amid rising geopolitical risks. The PBOC's verbal support and the strategic use of sovereign funds provide a backstop to avoid a broader sell-off.

However, the underlying tensions between the US and China could re-emerge quickly, and investors will likely remain sensitive to political rhetoric in the coming weeks. Domestic consumer strength and central bank support will be key in sustaining market momentum if trade tensions escalate further.

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