China’s top financial regulator warned on Wednesday that U.S. trade policy is putting serious pressure on the country’s capital markets, but also predicted a shift that could ultimately benefit domestic equities.
Wu Qing, Chairman of the China Securities Regulatory Commission (CSRC), said the Biden administration’s tariff regime—particularly the latest rounds imposed by President Donald Trump—has created significant headwinds for Chinese financial markets.
“U.S. tariffs have brought great pressure to China’s capital markets,” Wu said during a press conference in Beijing. “But they will also forcefully promote long-term capital into the stock market.”
Despite trade tensions and a softening global macroeconomic backdrop, Wu argued that Chinese assets are gaining appeal among investors due to rising uncertainty in overseas markets.
The CSRC also pledged to step up support for A-share listed companies directly impacted by the tariffs. “China will help A-share listed companies cope with these difficulties,” Wu added, without providing specifics on whether this would involve financial relief, policy changes, or regulatory easing.
Broader Context
Wu’s comments follow a wave of U.S. tariffs on Chinese goods, part of an intensifying trade standoff that began in April. Washington has now imposed duties as high as 145% on select Chinese imports, sending ripple effects through global markets and forcing Beijing to reevaluate its capital allocation strategies.
The Shanghai Composite Index and CSI 300 have both experienced heightened volatility in recent weeks, though government-led buying and increased fund flows from state entities have helped temper sharp declines.
Analysts say the CSRC may be preparing further market-stabilization measures if capital outflows accelerate or if trade tensions worsen.
Strategic Response
China has signaled that redirecting capital toward domestic equities and long-term investment is now a core part of its strategy to offset external shocks.
Wu’s remarks are also part of Beijing’s effort to reassure foreign investors and local companies alike that the country’s financial markets remain resilient and investable—even as Washington’s tariff pressure mounts.
Whether this strategy will work in the long run remains to be seen. But for now, China’s regulators appear determined to turn external pressure into internal momentum.
