FX.co ★ China Stocks Drop as Trade Tensions Intensify

The Shanghai Composite Index decreased by 0.8%, dipping below the 3,890 mark, while the Shenzhen Component slumped 1.9% to 12,840 on Friday. This downturn indicates that mainland Chinese stocks are set to close the week on a lower note, primarily due to escalating trade tensions between the United States and China, which have negatively impacted investor sentiment. These Chinese equity movements mirrored losses on Wall Street following reports from two American banks revealing bad loans, sparking concerns about broader stress within the credit markets. Additionally, Beijing has accused Washington of intentionally stoking fears around rare earth supply controls, whereas U.S. officials have warned that these actions could threaten global supply chains. Notably, President Donald Trump and President Xi Jinping are anticipated to meet in South Korea later this month in a bid to reduce tensions. Furthermore, investors are looking forward to the upcoming Fourth Plenum for potential new policy directions. The declines were notably led by technology and clean energy stocks, with significant reductions observed in companies such as ZTE Corp, Zhongji Innolight, Tongfu Microelectronics, Sungrow Power, and Contemporary Amperex, which all fell between 1.5% and 7.4%.