China Markets Approached 3-Month Highs Amid Protracted Tariff Uncertainty

Li Chen
08 Jul, 2025
Hong Kong

Stock market indexes in China and Hong Kong rebounded ahead of the release of key inflation reports on Wednesday.

The Hang Seng Index edged up 0.8%, and the mainland-focused CSI 300 index advanced nearly 1% as investors reviewed the latest iteration of change in the U.S. trade policy. 

The Trump administration delayed the start of additional tariffs on 14 trading partners but threatened to impose a 25% import tax on Japan and South Korea in the event of a lack of an agreement. 

Investors bid up stocks, hoping that Donald Trump will back down at the last minute and agree on a lower rate of tariff, as in the past.

The Hang Seng index traded near a three-month high and recouped all the losses after the Trump administration launched a global tariff war to finance tax cuts for the wealthy. 

The constant shift in the U.S. trade policy and ongoing uncertainty have wreaked havoc on small and medium-sized manufacturing companies in China and Asia, pushing thousands of U.S. independent retailers and businesses to the brink of collapse. 

At least three million jobs are impacted in China, Vietnam, and Japan, and as many as 95,000 U.S. small businesses are likely to face closure this year. 

Moreover, U.S. consumers are facing higher prices as most businesses pass the cost of tariffs to consumers.

The average U.S. tariff on imported goods across all industries is likely to jump from less than 5% to close to 20%, which could raise as much as $150 billion for the U.S. federal government, too little to make a dent in the annual fiscal deficit. 

China's overall consumer price inflation is expected to inch higher by 0.1%, and the producer price is likely to extend its decline for the 33rd month in a row and fall more than 3%. 

The National Bureau of Statistics is scheduled to release two inflation reports on Wednesday.

 

China Indexes and Stocks 

The Hang Seng index increased 0.8% to 24,098.71, and the mainland-focused CSI 300 index advanced 0.9% to 3,994.36. 

Baidu Inc. jumped 3.3% to HK $88.50, Xiaomi Corp. gained 2.1% to HK $58.55, and Kuaishou Technology jumped 3.4% to HK $65.20. 

Alibaba Group Holding advanced 1% to HK $106.50, Tencent Holdings Ltd. decreased 0.2% to HK $501.0, and Meituan edged up 0.2% to HK $119.60.