Eliza Wong
US-China Trade Talks: TikTok and Tariffs in Focus
High-level discussions between Chinese and US officials are set to occur in Spain from September 14-17, with Vice Premier He Lifeng (何立峰) leading the Chinese delegation. These talks will address persistent trade friction points including US unilateral tariff measures, export control abuses, and the ongoing TikTok controversy that continues to affect cross-border technology investments.
TikTok’s Regulatory Crossroads
The Chinese Ministry of Commerce has reiterated its consistent position on protecting Chinese companies’ legitimate rights and interests. ‘The Chinese government highly values data privacy and security,’ stated the ministry spokesperson, emphasizing that China ‘has never and will never require enterprises or individuals to collect or provide data located overseas for the Chinese government in violation of local laws.’ The upcoming talks represent a critical opportunity for both nations to find common ground on these sensitive technology and trade issues.
Market Implications of Trade Diplomacy
– Resolution of TikTok’s operational status could remove significant uncertainty for Chinese tech companies operating globally
– Reduction of unilateral tariffs would improve export prospects for affected Chinese manufacturers
– Constructive dialogue could signal improved US-China relations, potentially boosting investor confidence in cross-border investments
China’s Fiscal Policy Flexibility: Ample Room for Maneuver
Finance Minister Lan Fo’an (蓝佛安) delivered reassuring messages about China’s fiscal capacity during a recent State Council Information Office press conference. With a government debt-to-GDP ratio of 68.7% at the end of 2024, comprising 92.6 trillion yuan in total government debt, China maintains substantial policy space to support economic growth while managing risk effectively.
Debt Structure and Risk Assessment
China’s debt composition includes 34.6 trillion yuan in national debt, 47.5 trillion yuan in local government statutory debt, and 10.5 trillion yuan in local government隐性债务 (implicit debt). Minister Lan emphasized that ‘government debt corresponds to substantial high-quality assets,’ providing a buffer against financial instability. The ministry plans to continue implementing debt resolution measures while proactively deploying 2026 local government debt quotas ahead of schedule to support economic stabilization.
Strategic Fiscal Deployment
– Early allocation of 2026 debt limits demonstrates forward-looking policy approach
– Multiple measures planned to address存量隐性债务 (outstanding implicit debt)
– Policy continuity maintained while enhancing flexibility and predictability for market participants
Semiconductor Sector Developments: Trade Investigations Intensify
China’s Ministry of Commerce has initiated anti-dumping investigations against US-origin analog chips, specifically targeting general interface and gate driver chips. The investigation, launched in response to petitions from domestic industry players, examines alleged dumping margins exceeding 300% during the investigation period.
Investigation Scope and Impact
The investigation targets four major US semiconductor manufacturers: Texas Instruments, Analog Devices Inc. (ADI), Broadcom, and ON Semiconductor. According to application documents from the Jiangsu Semiconductor Industry Association, the investigated products captured an average 41% market share in China during the review period, with import volumes showing sustained significant growth from 1.159 billion units in 2022 to 1.59 billion units in 2024.
Industry Association Support
The China Semiconductor Industry Association issued a statement supporting the investigations, emphasizing that ‘the healthy development of the semiconductor industry requires a fair environment.’ The association advocates for technological innovation, industrial chain coordination, and mutually beneficial international cooperation conducted under market principles.
Regulatory Enforcement: Crackdown on Financial Fraud
The China Securities Regulatory Commission (CSRC) has taken severe action against *ST Dongtong (东方通) for serious financial fraud spanning four years. The company allegedly falsified financial data in periodic reports, violating securities laws and regulations. The CSRC has proposed penalties totaling 273 million yuan against the company and 44 million yuan against seven responsible individuals.
Enforcement Consequences
The actual controller faces a 10-year market ban, and the company triggers重大违法强制退市情形 (major illegal强制退市 circumstances), prompting the Shenzhen Stock Exchange to initiate delisting procedures. The CSRC will transfer any criminal线索 (clues) to judicial authorities in accordance with the Criminal Law and relevant provisions, demonstrating China’s intensified approach to market regulation and integrity maintenance.
Digital Currency Advancement: Cross-Border Payment Innovations
The Cyberspace Administration of China, together with relevant departments, has drafted provisions to promote and standardize electronic document applications. The proposed rules encourage financial institutions to explore using数字人民币 (digital yuan) and other innovative payment methods for cross-border transactions, provided they operate within legal compliance and risk control parameters.
Logistics and Trade Digitization
The initiative aims to enhance货物贸易和运输数字化水平 (digitization level of goods trade and transportation), reduce overall logistics costs, and protect the legitimate rights and interests of parties involved in electronic document activities. This development represents another step in China’s broader strategy to modernize its financial infrastructure and promote currency internationalization.
Automotive Industry Support: Technology-Driven Growth Strategy
Eight government departments, led by the Ministry of Industry and Information Technology, jointly released the Automotive Industry Stabilization and Growth Work Plan (2025-2026). The plan emphasizes technological innovation to stimulate consumer demand, particularly through advancements in automotive chips, operating systems, artificial intelligence, and solid-state batteries.
Intelligent Connected Vehicle Development
The工作方案 (work plan) promotes industrial application of intelligent networking technology, including deeper development of ‘vehicle-road-cloud integration’ application pilots. The initiative encourages pre-installation of V2X and 5G communication modules, accelerated adoption of北斗系统 (Beidou system), and multi-scenario applications in logistics, sanitation, and mobility services. The plan also supports conditional approval of L3 autonomous vehicle production access while promoting improvements to relevant laws and regulations.
Global Market Context: Nasdaq Records and Fed Watch
While Chinese markets focus on domestic developments, global influences remain significant. The Nasdaq Composite reached new highs, with Tesla surging over 7% and other tech stocks showing strength. The Nasdaq Golden Dragon China Index declined slightly by 0.11%, with mixed performance among popular Chinese ADRs.
Central Bank Decisions Loom
This week brings critical central bank decisions that will influence global capital flows. The Federal Reserve’s September 18 meeting carries a 92% probability of a 25-basis-point cut according to CME FedWatch data. The Bank of Japan and Bank of England also meet, with expectations of unchanged policies, while the Bank of Canada is widely anticipated to cut rates by 25 basis points.
Chinese Economic Data Release
On September 15, the National Bureau of Statistics will release August economic data including industrial added value, fixed asset investment, and retail sales figures. These indicators will provide crucial insights into China’s economic trajectory amid ongoing policy support measures.
Market Technicals: IPO Pipeline and Share Unlocks
The CSRC approved one IPO registration for Xiamen Hengkun New Material Technology’s科创板 (Sci-Tech Innovation Board) listing. This week sees five new share offerings: United Power and Jianfa Zhixin on Monday, Jinhua New Material and Yunhan Core City on Tuesday, and Ruilike Secret on Friday.
Significant Share Unlocks Pressure
Fifty-four companies face share unlock periods this week, totaling 6.275 billion shares with a market value of approximately 195.034 billion yuan. China Shipbuilding leads with 116.082 billion yuan in unlocked shares, followed by Winner Medical (159.43 billion yuan) and KTC Technology (105.9 billion yuan). High unlock ratios appear in Zhejiang Zhengte (69.93%), Winner Medical (69.83%), and China Shipbuilding (68.27%), potentially creating near-term selling pressure.
Strategic Outlook for Chinese Equity Markets
This week presents multiple crosscurrents for investors in Chinese equities. Positive fiscal space signals contrast with ongoing trade tensions, while regulatory enforcement demonstrates commitment to market integrity. The digital currency advancement and automotive industry support policies indicate targeted sector development approaches.
Investors should monitor US-China talk outcomes for technology sector implications, particularly regarding TikTok’s resolution. Semiconductor industry developments may create volatility but also opportunities as China strengthens domestic capabilities. The substantial share unlocks require attention to individual company technicals, while central bank decisions globally will influence foreign capital flows.
Forward-looking investors should focus on companies with strong fundamentals, transparent governance, and alignment with national policy priorities. The continued emphasis on technological innovation across multiple sectors suggests sustained opportunities in electric vehicles, semiconductors, and digital infrastructure. Maintain diversified exposure while being selective within sectors affected by trade tensions or regulatory actions.
