Asian markets saw gains on Wednesday as investors reacted to China’s ambitious economic targets, despite persistent domestic challenges and the escalating threat of a global trade war. Beijing’s decision to set a five percent growth target and bolster fiscal spending reassured markets, even as concerns over US tariffs and European trade tensions continued to loom.
Following a global market downturn on Tuesday, driven by retaliatory trade measures from China, Mexico, and Canada, investor sentiment improved as China’s National People’s Congress unveiled its economic strategy. However, while the stimulus measures were welcomed, analysts remain cautious given the hurdles China faces. The country continues to grapple with a prolonged property sector crisis, weak consumer demand, and stubbornly high youth unemployment.
To counteract these pressures, China announced an increase in its budget deficit to four percent, alongside a pledge to generate 12 million new jobs and maintain a two percent inflation target for 2025. Additionally, Beijing reaffirmed its commitment to a 7.2 percent rise in defence spending, mirroring last year’s increase.
The market reaction was mixed. Hong Kong’s Hang Seng Index surged 2.5 percent in early trading before settling at around 1.5 percent. Jakarta jumped over two percent, while Taipei gained one percent. Tokyo and Shanghai remained stable, and Seoul saw a slight uptick. However, Sydney, Wellington, and Bangkok posted declines of approximately one percent.
One of the most notable moves came from CK Hutchison, whose shares soared 25 percent following news that the firm had agreed to sell its Panama Canal ports to a US-led consortium under significant political pressure from Washington.
Meanwhile, trade tensions continue to intensify. US President Donald Trump signed an executive order on Monday to double tariffs on Chinese goods from 10 percent to 20 percent, with further levies anticipated. China retaliated swiftly, announcing 10 and 15 percent tariffs on a range of US agricultural imports. Investors remain wary, with fears mounting over additional US tariffs targeting the European Union, which could sustain market volatility in the short term.
Despite these challenges, China’s focus on domestic demand and fiscal expansion suggests a commitment to sustaining growth, offering cautious optimism for investors navigating an increasingly uncertain global trade landscape.
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