Chinese Assets Surge 5% Amid Global Volatility, Tariff Policies

In the late hours of May 6, Chinese assets experienced a significant surge. By 23:00, the triple-leveraged FTSE China ETF saw a rise of over 5%, while the double-leveraged China Internet Stock ETF increased by over 3%. The FTSE China A50 Index futures also saw a near 1% increase. This surge in Chinese assets came amidst a backdrop of global market volatility, particularly influenced by the tariff policies of the Trump administration.

The surge in Chinese assets was not an isolated event but part of a broader trend of resilience in the face of external pressures. Despite the implementation of reciprocal tariffs on April 9, which had a direct impact on exports to the United States, the overall economic activity in China showed signs of resilience. High-frequency data indicated that industrial production and manufacturing investment were affected, but the impact was mitigated by accelerated trade diversion to other regions. Consumer spending remained robust, with high levels of activity in sectors such as automotive and digital products, supported by government policies aimed at boosting consumption.

The economic data for April highlighted several key points. Industrial production, while affected by the tariffs, showed signs of stabilization. The manufacturing PMI for April was 49.0%, slightly below the consensus estimate but indicating a gradual recovery. Consumer spending continued to be a bright spot, with strong performance in sectors such as automobiles and home appliances, driven by policies such as the "trade-in" program. The government's fiscal policies, including the issuance of special bonds, provided additional support to the economy, helping to stabilize social financing.

The surge in Chinese assets also reflected broader trends in the global economy. The People's Bank of China's policies, including the release of structural surplus and improved cross-border capital flows, contributed to the stability of the Chinese currency. The renminbi's appreciation by over 900 points was driven by factors such as reduced corporate demand for foreign exchange and improved investor sentiment towards Chinese assets.

The resilience of Chinese assets in the face of global market volatility underscores the country's economic fundamentals and the effectiveness of its policy measures. Despite external challenges, China's economy continues to show signs of stability and growth, supported by robust consumer spending and proactive fiscal policies. The surge in Chinese assets reflects investor confidence in the country's economic prospects and its ability to navigate global uncertainties.