China declares trade war

China declares trade war

China vows to "fight to the end" after Trump threatens 50% tariffs

China has vowed to "fight to the end" if the United States proceeds with its tariff hike, bringing the world's two largest economies to the brink of a full-blown trade war.

In escalating tensions, China's Ministry of Commerce announced on Tuesday that it will respond strongly if US President Donald Trump follows through on his threat to impose an additional 50% tariff on Chinese goods.

"If the US proceeds with these escalating tariff measures, China will take resolute countermeasures to safeguard its rights and interests," a Commerce Ministry spokesperson said. "If the US insists on going its own way, China will fight to the end," he added, according to a report in the Financial Times.

This dispute between Beijing and Washington comes as a wave of so-called "reciprocal tariffs" on dozens of US trading partners is set to take effect on April 9.

These measures, along with the 10% tariffs announced during Trump's Liberation Day celebration last week, have triggered turmoil in global stock markets and increased the likelihood of a global recession.

The yuan has surpassed 7.2 against the dollar for the first time since September 2023, indicating Beijing's stance on supporting the currency. Additionally, funds and companies are buying stocks to support the domestic market.

In the face of global financial tensions, China has launched a series of swift and intensive measures aimed at stabilizing capital markets and restoring investor confidence.

Meanwhile, major Chinese stock indices, including the benchmark Shanghai Composite Index, the Shenzhen Composite Index, and the ChiNext Index, suffered significant losses on Monday, exceeding 7%.

In response to these losses, some state-owned companies have rushed to increase their stakes in domestic stocks, expressing strong confidence in the long-term prospects of the country's capital markets. The People's Bank of China announced liquidity support through re-lending facilities on Tuesday, according to Xinhua.

Public Alert

A number of state-owned investment companies have declared a public alert to support financial markets.

Central Huijin Investment Co., Ltd., a Chinese state-owned investment company, said it has increased its holdings of exchange-traded funds (ETFs) once again and will continue to do so in the future to "resolutely maintain" the stable operation of the capital market.

The central bank also pledged to firmly support the company in increasing its holdings of equity index funds, indicating that it will provide sufficient support for re-lending when necessary.

Several state-owned investment companies have also increased their share holdings or announced plans to accelerate share buybacks, including Chengdong Group, China Reform Holdings Co., Ltd., and seven listed companies affiliated with China Merchants Group.

On Tuesday, the National Financial Regulatory Authority announced measures to raise the ceiling on equity investment by insurance funds, with greater support for equity investments in strategic emerging industries and the strengthening of new, high-quality productive forces.

Analysts believe the coordinated actions sent a clear signal of China's determination to support its capital markets.