China’s stock market is once again under a cloud. Although it had been rallying earlier this year due to the “cost-effective artificial intelligence (AI) deep learning” effect, U.S. President Donald Trump has once again brought out the tariff card against China.
On the 4th, which marks the beginning of China’s largest annual political event, the Two Sessions (the National People’s Congress and the Chinese People’s Political Consultative Conference), President Trump decided to impose an additional 10% tariff on Chinese imports. As the trade war intensifies, investment sentiment, which had barely revived, is quickly shrinking.
On February 28, the Shanghai Composite Index closed at 3,320.9, down 1.98% from the previous trading day. Over the past week, the Shanghai Composite Index fell 1.72%. The CSI300 Index, which consists of the top 300 stocks by market capitalization on the Shanghai and Shenzhen stock exchanges, also ended the day down 1.97% at 3,890.05. Global investment funds, which had been flocking to China’s stock market due to optimistic prospects for the AI industry, are now retreating due to the U.S.-China trade conflict.
China has announced a major counteraction against the U.S. with the opening of the Two Sessions on the 4th. This tough stance is evident from the strong position taken by the Chinese Ministry of Commerce, stating, “If the U.S. continues to push to the end, we will take all necessary countermeasures.” Market participants expect the Chinese government to aggressively pursue retaliatory actions against the U.S. and protect its own industries, even though it is facing the challenge of maintaining a 5% economic growth rate this year.
On the 8th, China’s trade balance for February will be released. Recently, China’s export growth rate has exceeded market expectations, largely due to hurried exports ahead of potential further tariff increases. The Chinese yuan’s exchange rate is also weakening, which is boosting China’s global market share.
Beijing–Eun-jung Kim, Correspondent [email protected]