China Stocks Fall as Trump’s Softer Rhetoric Fails to Ease Trade Tensions

Chinese equities tumbled at the start of the week, with investors growing anxious that U.S.–China trade relations could deteriorate once again. The Hang Seng China Enterprises Index slid as much as 3.6% before trimming losses, while the CSI 300 Index ended the session down 0.5%. Tech giants such as Alibaba Group and Xiaomi were among the top decliners, reversing part of the market’s strong year-to-date rally.The pullback came just days after President Donald Trump hinted that Washington remained open to talks with Beijing, even as he threatened new tariffs of up to 100% on Chinese imports. The announcement reminded traders of how fragile the trade truce remains, sending investors toward safer assets.

China’s central bank sought to stabilize sentiment by setting the yuan’s daily reference rate at its strongest level in months, signaling its commitment to maintain currency stability. Bond futures climbed as investors sought refuge amid the renewed uncertainty.

Despite the selloff, some market participants used the dip to reenter Chinese equities, believing the broader uptrend remains intact. “Short-term volatility is expected, but China’s diversified export base and quick policy response should limit the overall damage,” said Dilin Wu, strategist at Pepperstone Group.

Certain sectors proved resilient. Shares of Semiconductor Manufacturing International Corp. surged more than 6% as investors bet on Beijing’s support for domestic chipmakers in response to U.S. export limits. Rare-earth producers also gained as China continued leveraging its control of key minerals in trade negotiations.

In the currency market, the offshore yuan rebounded 0.2%, erasing losses from the previous week. Analysts said the People’s Bank of China’s firm stance would help calm regional markets and prevent sharp depreciation.

While Monday’s retreat underscored investors’ lingering concerns about trade risks, analysts view the correction as a healthy pause after a year of strong gains. The Hang Seng China gauge remains up nearly 30% in 2025, fueled by optimism in technology and artificial intelligence. Still, with high-level talks and a key Communist Party policy meeting approaching later this month, traders expect further swings ahead as the world’s two largest economies continue to test each other’s resolve.