China stocks higher as PM expresses confidence in economic recovery

SHANGHAI: Mainland China stocks closed at a four-week high on Tuesday, after Chinese Premier Li Qiang expressed confidence in the country’s economic recovery, while recent data showed signs of improvement.

Li told the opening ceremony of the annual China International Import Expo that he was confident China will meet this year’s growth target, and that authorities had fiscal and monetary tools at their disposal.

Market sentiment also improved after a private survey showed that China’s services activity expanded at the fastest pace in three months in October.

But the US presidential election remained the key focus of markets globally, with opinion polls showing Vice President Kamala Harris and former President Donald Trump virtually even.

The Shanghai Composite index closed up 2.32% at 3,386.99 points, while the blue-chip CSI 300 jumped 2.53% to 4,044.57 points. Both indexes finished at the highest level since Oct. 8.

Hong Kong’s benchmark Hang Seng index gained 2.14% at 21,006.97 points, its strongest closing level since Oct. 14. The Hang Seng China Enterprises index advanced 2.56% to 7,556.62 points.

As part of his pitch to boost American manufacturing, Trump has promised voters he will impose tariffs of 60% or more on goods from China. Trump’s proposed tariff and tax policies are seen as inflationary, and therefore, likely to keep US interest rates high and undermine currencies of trading partners.

“Direct US tariffs on imports from China may have less impact than in 2018, but further tightening of the supply chain measures introduced by the Biden administration or indeed sweeping tariffs against intermediary countries have the potential to cause greater damage to China’s economy,” said Jon Harrison, managing director for EM macro strategy at TS Lombard.

“At the same time, Beijing’s change of direction on stimulus, including a focus on supporting equities and boosting consumption, will help to cushion the market impact.” ** Separately, Chinese lawmakers reviewed a cabinet bill that would raise ceilings on local government debt to replace existing hidden debt as the standing committee of China’s top legislature started their meeting on Monday, state media Xinhua reported.