China’s stock markets reopen after the Lunar New Year break, facing renewed trade tensions with the U.S. and major developments in artificial intelligence. Investors are closely monitoring Beijing’s response to bolster market confidence.
Despite the Trump administration imposing new tariffs on Chinese imports, the initial impact appears less severe than expected. Hong Kong stocks rallied earlier this week, fueled by optimism around China’s AI leader DeepSeek, which recently unveiled a cost-effective AI model, shaking up global tech valuations.
One of the first signals from Beijing will be the yuan’s central bank fix. A weaker yuan helped counter tariffs during Trump’s first term, and any devaluation could indicate China’s stance on trade negotiations. Since Jan. 27, the offshore yuan has dropped 0.6% against the dollar, hitting record lows.
Chinese stocks in Hong Kong climbed over 4% this week, with tech giants surging nearly 7%. Semiconductor firms saw massive gains, with SMIC jumping 8.5% and Hua Hong Semiconductor soaring 12.7%. Analysts believe DeepSeek’s innovation strengthens China’s AI sector, even amid U.S. tech restrictions.
The trade war’s impact is less likely to rattle markets compared to 2018, as investors have anticipated tensions. Expectations are rising for China to roll out economic support measures, particularly in response to weak domestic growth and property market concerns.
Trump and Chinese President Xi Jinping are expected to discuss trade soon, with investors hoping for signs of a potential deal. Meanwhile, bullish AI and EV sectors continue to drive market sentiment, keeping Chinese equities resilient despite ongoing trade uncertainties.


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