Shanghai Stock Market: AI Rally and Economic Stimulus Overcome 'Tariff Risk'

Chinese stock markets remain resilient despite tariff risks from the United States. While U.S. President Donald Trump is pressuring China with additional tariffs, expectations for the artificial intelligence (AI) industry and the Chinese government's aggressive economic stimulus measures are acting as upward momentum.

On the 7th, the Shanghai Composite Index closed at 3372.55, down 0.25% from the previous trading day. On a weekly basis, it rose 1.55% over the past week. The CSI300 index, which consists of large-cap stocks, also closed at 3944.01, down 0.31% from the previous trading day, but rose 1.38% on a weekly basis.

President Trump imposed an additional 10% tariff on Chinese products starting on the 4th of last month, followed by another 10% on the 4th of this month, bringing the total additional tariff to 20%. The U.S. tariffs are hitting Chinese exports. China's exports in January-February this year amounted to $539.94 billion (about 780 trillion won), up 2.3% from the same period last year, falling far short of market expectations (5%). Concerns about U.S. tariff pressure also dragged down Chinese stocks in the latter part of last week.

Many investors are expecting economic stimulus effects as the annual largest political event, the Two Sessions (National People's Congress and Chinese People's Political Consultative Conference), set this year's economic growth target at around 5% and the fiscal deficit ratio at 4% of GDP, the highest ever. The direction of the Chinese stock market is expected to be determined by the Chinese government's new messages at the closing of the Two Sessions on the 11th and whether the U.S. and China return to negotiations.

Beijing=Kim Eun-jung Special Correspondent kej@hankyung.com