SHANGHAI/HONG KONG (Reuters) -China and Hong Kong stocks held steady on Tuesday as investors, buoyed by the country’s tech strength, shrugged off a new U.S.-China trade spat and focused instead on the upcoming annual parliamentary sessions to gauge Beijing’s policy direction.
China on Tuesday swiftly retaliated against fresh U.S. tariffs, announcing 10%-15% hikes to import levies covering a range of American agricultural and food products, and placing twenty-five U.S. firms under export and investment restrictions.
China’s blue-chip CSI300 Index was roughly flat as of 0551 GMT and the Shanghai Composite Index was up 0.2%. Hong Kong’s benchmark Hang Seng was also little changed.
Yang Tingwu, vice general manager of asset manager Tongheng Investment, said that China’s stock market is immune to higher U.S. tariffs as the country’s growing strength, including military and financial power, is underpinning Chinese assets.
“If you look at TikTok, Xiaohongshu or DeepSeek, China’s technological clout is expanding,” said Yang.
Tech shares traded onshore gained nearly 2%.
China’s actions came after U.S. President Donald Trump reaffirmed on Monday that he would increase tariffs on all Chinese imports to 20% from 10% to punish Beijing for failing to halt shipments of fentanyl to the U.S. The U.S. tariffs took effect at 0500 GMT on Tuesday.
The cumulative 20% duty also comes on top of tariffs of up to 25% imposed by Trump during his first term on some $370 billion worth of U.S. imports.
Another trade war will complicate problems for the U.S., but it’s “not a big deal” for China and Hong Kong stocks, said Charles Wang, founder of Dragon Pacific Capital Management.
China has already reduced dependence on trade with the U.S., the economy is recovering, and stronger government policies are expected, so “I don’t think new U.S. tariffs will change the market’s trajectory,” Wang said.
China’s defence and gold-related shares rose around 3% and 2%, respectively, while agriculture stocks edged up.
The renewed tariff tit-for-tat coincides with the start of China’s National People’s Congress (NPC) on Wednesday, where Beijing is expected to roll out its 2025 economic priorities.
Beijing was expected to maintain its economic growth target at roughly 5% and announce a budget deficit of 4% of GDP.
Eva Lee, head of Greater China Equities at UBS Global Wealth Management, said that before the latest U.S. tariffs were announced, expectations for the NPC meeting were not high.
“Now they (U.S.) announced the 10% and then swiftly implemented that, so that might put more … you can say pressure on the China side to do more at the NPC meeting,” Lee said.
Shares of Chinese electric vehicle maker BYD slumped nearly 4% after the company said it had raised $5.59 billion in a primary share sale at a discount to its Monday closing price.
(Reporting by Shanghai Newsroom and Jiaxing Li in Hong Kong; Editing by Sumana Nandy, Jacqueline Wong and Sonali Paul)
