- The Shanghai Composite Index is near a nine-month high on hopes of an end to the US-China trade war.
- China promised spending, tax cuts, and protection of foreign companies’ technology secrets.
- “A high degree of optimism [is] already baked into markets,” FXTM said.
Chinese stocks climbed on Wednesday after Beijing lawmakers outlined new measures that were seen as a concession in Donald Trump’s trade war.
In a bid to relieve trade tensions with the US, Chinese officials pledged to bar government authorities from demanding foreign companies give up their technology secrets in exchange for access to Chinese markets, which will encourage foreign investment, according to the Associated Press, citing comments from Ning Jizhe, vice-chairman of the Cabinet’s economic planning agency.
It will “provide a more encompassing and beneficial legal guarantee,” the lawmaker added.
The Shanghai Composite Index rose 1.6% to its highest level in nearly nine months. Hong Kong’s Hang Seng Index also rose 0.2%.
Sentiment was also helped by Chinese Premier Li Keqiang’s announcement on Tuesday of a GDP growth target of 6 to 6.5% this year, a fresh bout of infrastructure spending and tax cuts totalling 1.3 trillion yuan ($US200 billion).
Li also promised foreign companies would be “treated as equals” of Chinese companies.
The US-China trade war has affected millions, including American soybean farmers and whiskey producers as well as Chinese electronics manufacturers and toy makers.
It continues to cast a shadow over the ongoing National People’s Congress, one of China’s tentpole political events. Chinese officials may be hoping that promises of government spending, tax cuts and greater openness to foreign business will lift sentiment and help to bring an end to the trade war.
However, analysts are sceptical that China’s pledges will be enough to convince investors:
“The movements across global equity markets are likely to be limited until investors are offered some real clarity on the progress of US-China trade talks,” said Lukman Otunuga, a research analyst at FXTM.
“With a high degree of optimism over trade talks already baked into the markets, many will be left empty-handed if the final deal fails to mirror the heightened expectations.”
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