China, HK stocks power ahead as eased trade tensions fuel rally
China's blue-chip CSI300 Index climbed 0.7% by the midday break, reaching an eight-month peak and on track for a fifth straight session of gains. The Shanghai Composite Index rose 0.8%.
Hong Kong's benchmark Hang Seng jumped more than 1% to hit its highest level in almost four years.
In a sign the rally likely has legs, daily turnover in China stocks has expanded to near five-month highs, while margin financing - money borrowed to buy stocks - has hit a level not seen in nearly four months, signalling revived 'animal spirits'.
'External and internal headwinds have subsided faster than expected,' Huatai Securities said in a note to clients, adding that 'in the latest round of tariff talks with the U.S., China has strengthened its hand.'
China's economy benefits from the government's stepped-up campaign against 'involutionary competition' and positive real estate policies, Huatai added.
In a sign of reduced tensions, U.S. Treasury Secretary Scott Bessent said on Tuesday that U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the deadline for negotiating a trade deal. 'I think trade is in a very good place with China,' Bessent said.
Chinese tech stocks, which are sensitive to Sino-U.S. relations, jumped on Wednesday.
China's tech-focused STAR50 Index gained 1%, while Hong Kong's Hang Seng Tech Index jumped nearly 2%.
China-listed chemicals and steel continued to rise amid bets producers in these sectors will benefit from Beijing's expected industrial capacity cuts.
Building materials and construction engineering stocks also powered ahead, as China's massive hydropower dam project brightened the sectors' prospects.
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Express Tribune
3 hours ago
- Express Tribune
Sino-US rivalry — collusion, competition, conflict
The writer is a retired major general and has an interest in International Relations and Political Sociology. He can be reached at tayyarinam@ and tweets @20_Inam Listen to article The US-China competition remains the 'defining issue' of international politics. My last piece titled the "Sino-US rivalry" was published in this space on January 11, 2024, where some relevant writings of the CNN-famed Fareed Zakaria and others were discussed. Given the comparative National Power Potential (NPP), the world seems to be drifting from unipolarity, ushered in after the collapse of the Soviet Union in 1990s; to the 'present state' of bipolarity (the US and China); and to the likely future scenario of multipolarity (China, Russia, EU, India and Brazil). First, a bipolar comparison. Conventional view is that China is 'already a US peer or near-peer, economically'. However, as I had pointed out, in the present state of competition, China still needs to do a lot of catching up, as the American NPP — especially its military strength, power of alliances and its cosmopolitan, multicultural and educated demography — far outpaces China, the 'hesitant regional power' that is trying to become a more assertive superpower. The US GDP is almost twice as large as China's and some analysts believe that the Chinese official figures are fudged, with Beijing manipulating key economic metrics, including GDP. China is heavily dependent upon fuel imports; has almost 20% housing vacancy rates and over $1 trillion in debt from its 48,000 km high-speed rail networks. The US by comparison leads in key high-technology sectors like the IT/software and services sector (80% of global profit shares); aerospace and defence (66.35%); drugs and biotechnology (60%) and semi-conductors/chips (58%, compared to China's miniscule 2.6% share). Then there are studies indicating that in a full-blown trade war, 'decoupling' China from the international economic system (sanctions) will disproportionately hurt Beijing, if China has not undertaken economic hardening like Russia. Moscow, in anticipation of the West Plus's reaction to Ukraine, had taken on years of pre-emptive economy-hardening steps to mitigate the ill-effects of sanctions. China's other handicaps include demographic weakness (overpopulation, effects of one-child policy, aging population); lack of alliances; its lighter presence in important global regions (Europe, the Middle East); its comparatively subdued power to influence others; China's lack of experience and exposure to act big, unlike the US, having the benefit of history and multicultural pluralism; and China's nagging legacy of trouble-spots (Spratly Islands, Tibet, Turkestan, human rights, etc). So far, there is no alternative to US power. But that does not mean China is and will not catch up. Second, the prospect of a Sino-US conflict. One had disagreed with the likelihood of conflict, as Beijing is likely to blink first, because the global status quo is protective of its core interests. Additionally, China is not a 'spoiler state' like Russia. President Xi abandoning his 'lone-wolf diplomacy' has often asked the US to lift sanctions, especially on technology transfers. And President Trump recently lifted ban on the sale of America's Nvidia-made semiconductors (especially the H20) to China. US's I-Phone is designed in California and assembled in China by a Taiwanese company, Foxconn. And in more curious case of inter-dependence, China monopolises supply of rare-earths, needed for US-manufactured semiconductors, to be used in China's high-end products, for export to the US/Western markets. There are more anti-conflict indicators, especially about the much-touted US-China conflict over Taiwan. There is a great deal of soul-searching in the American policy establishment about the cost-benefit of a war to defend Taiwan against a Chinese invasion. The US rationale in defending Taiwan is to prevent China from gaining a new foothold to project power in East Asia and disrupt trade routes in the western Pacific, thus upsetting the western-dominated global economy. America's 'vital' interest, however, is to prevent China from regional hegemony in Asia. In reality, Taiwan does not confer any outsized military advantages to China, other than extending the range of its missiles, AD assets and surveillance systems by a couple hundred 'unneeded' kilometres. Beijing can still target US regional assets in Guam, Japan and Philippines. China's under-sea gains would similarly be modest. In sum, Beijing's control of Taipei hardly overturns the regional military balance. Military logic and economic considerations, hence, do not warrant direct US involvement to defend Taiwan. Taiwan's TSMC still produces 90% of the world's most advanced chips. However, by 2032, the US company, Boston Consulting Group, will be producing 28% of the most advanced semiconductors. Likewise potential blockade of the narrow sea-lanes in East and South China seas by China marginally affects the global sea trade, as bypassing options exist through Indonesian and Philippine archipelago. Similarly, the notion that Chinese invasion undermines the US credibility is also geostrategically flawed, as fighting China over Taiwan unnecessarily binds US resources, needed elsewhere for the bigger objective of containing China. The US military prioritises developing the 'second island chain' of Guam, Marshal and Northern Mariana Islands, Micronesia and Palau for this purpose. In the US reckoning, Taiwan certainly matters, but not enough to justify war with China, as composite deterrence would likely work to dissuade China. And if push comes to shove, PLA will prevail in a conflict with Taipei with or without the US, the former scenario being more costly for the US Armed Forces. The suggestions that Taiwan should become a 'porcupine' in its denial-focused strategy against Chinese invasion is also not likely to work, as the island just does not spend enough on its defence, and ignores acquisition of anti-ship defence, naval mines, uncrewed weapons and drones. Taiwan can make the invasion slow, long and costly but not impossible, as its geography, low and dwindling materiel stockpiles in case of a Chinese naval blockade would ultimately tilt the operational balance in China's favour. So, no wonder, Washington officially supports 'One China' policy, respects China's redlines and there is much noise in Washington about 'competitive co-existence' with China. Third, alliances and economic integration. China remains one of the most important markets for EU especially Germany's export-driven economy. It meanders carefully through bloc politics, tries to be a peacemaker in the Middle East and vies for leadership mantle in the Global South. It is wary of a conflict with the US and so is the US. So, collusion, competition short of conflict will persist and recur.
Business Recorder
8 hours ago
- Business Recorder
China tariff deadline can be rolled forward 90 days: US Treasury chief
WASHINGTON: A deadline for tariffs between the United States and China to snap back to higher levels could be extended in a '90-day increment,' US Treasury Secretary Scott Bessent said Wednesday, ahead of trade talks next week. Top officials from the world's two biggest economies are set to meet in Sweden on Monday and Tuesday, with Bessent in the US delegation and Chinese Vice Premier He Lifeng attending the talks. 'We're in a very good place with China now,' Bessent told Bloomberg Television on Wednesday. He added that the upcoming talks would likely move beyond rare earths and export controls, and 'on to bigger discussions.' Asked about the August 12 deadline, when reduced tit-for-tat tariffs are due to bounce back to steeper levels, Bessent signaled openness to a significant extension. 'I think that we could roll it forward, maybe in a 90-day increment,' he said in the interview. Markets pare bets on Fed rate cuts following U.S.-China tariff delay 'Both sides have de-escalated, and I think we can get into a very good cadence of regular meetings with them,' he said. Washington and Beijing had slapped escalating tariffs on each other's exports in April, reaching prohibitive triple-digit levels, but both sides reached an agreement to temporarily lower them after negotiations in Geneva. The truce, however, is set to expire in August. Officials from the two countries also met in London in June. On Wednesday, Bessent said he expected the upcoming discussions could include talks on Chinese purchases of Russian and Iranian oil, alongside security issues. He said both countries would also discuss 'purchasing agreements,' especially on agriculture. Trade talks between the United States and China had initially stalled after their Geneva meeting, with Washington accusing Beijing of violating their pact and slow-walking export license approvals for rare earths. But the countries have since agreed to move forward on a framework to implement their consensus. Asked about a potential meeting between President Donald Trump and his Chinese counterpart Xi Jinping, Bessent said he did not expect anything before September and had no further information on this front. Regarding China's placing of an exit ban on a US government employee, Bessent said that issue could be on the agenda, but that he did not see the move as an attempt to gain leverage with Washington.
Business Recorder
11 hours ago
- Business Recorder
Indian rupee dips but firmer yuan, exporter dollar sales cushion losses
MUMBAI: The Indian rupee ended marginally weaker on Wednesday with the strength in the Chinese yuan and exporter activity helping the currency hold above a psychologically important support level. The rupee closed at 86.4075 per U.S. dollar, down slightly from its close at 86.3675 in the previous session but managing to hold above the 86.50 support level. The offshore Chinese yuan rose to a near three-week high while the dollar index was a tad lower at 97.4. Dollar sales from a large private bank and exporter activity also helped the rupee contain its losses on the day, alongside positive regional cues, a trader at a state-run bank said. India's benchmark equity indexes, the BSE Sensex and Nifty 50 closed higher by about 0.6% each, tracking gains in global equities that were buoyed by hopes of easing trade tensions after a deal between the U.S. and Japan. 'Equity markets globally are rallying on the view that deals reduce uncertainty,' ING said in a note. Indian rupee weakens slightly, broad dollar softness cushions pressure U.S. President Donald Trump also announced a trade agreement with the Philippines, released terms of a previous deal with Indonesia on Tuesday and said that EU representatives were coming for trade negotiations on Wednesday. Officials from China and the U.S. are also expected to meet next week to discuss an extension to the deadline for negotiating a trade deal. For India, though, the prospects of a trade deal before the August 1 deadline have dimmed, with talks deadlocked over tariff cuts on key agricultural and dairy products. Foreign portfolio outflows and the lack of an outcome on trade negotiations have maintained pressure on the rupee, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
