FX.co ★ China Stocks Retreat on Renewed Trade War Fears

The Shanghai Composite experienced a decline of 0.4%, settling around 3,250, while the Shenzhen Component decreased by 0.7% to 9,815 on Tuesday. This drop put an end to a five-day market rally, as ongoing concerns about a potential escalation in the Sino-US trade conflict weighed heavily on investor confidence. Sentiment was further dampened by Chinese President Xi Jinping's statement, made at the onset of his diplomatic tour in Southeast Asia, where he stressed that "no one wins in a trade war," highlighting Beijing's cautious approach amidst growing geopolitical tensions. The markets were unsettled by reports that the U.S. Department of Commerce had initiated national security probes into imports of semiconductors and pharmaceuticals—industries significantly dependent on Asian, particularly Chinese, supply chains. The U.S. heavily relies on Taiwan for semiconductor supplies and on China for pharmaceuticals. Additionally, markets are evaluating the implications of President Trump's reciprocal tariffs targeting China's prominent online retail platforms PDD’s Temu and Alibaba’s Taobao and TMall.