SHANGHAI: China stocks closed lower on Friday as Sino-US tensions dented investor sentiment and dragged most sectors lower, though aerospace defence companies jumped.

China’s blue-chip CSI300 Index closed down 1%, while the Shanghai Composite Index declined 0.6%.

The Hang Seng Index dropped 1.7%, while the Hang Seng China Enterprises Index slumped 2.3%.

The United States is set to expand the number of troops helping train Taiwanese forces, two US officials said on Thursday, amid heightened tensions between Washington and Beijing.

China’s aerospace defence companies jumped 1.9% after the news, while tech giants listed in Hong Kong plunged 3.3% to lead the decline.

On the one-year anniversary of Russia invading Ukraine, China called for a comprehensive ceasefire to the fighting and gradual de-escalation and easing of the situation.

However, Western diplomats and analysts have said China’s effort to cast itself as a peacemaker on Ukraine reflects its goal to burnish its image rather than a change of stance.

Chinese property developers and new energy firms both finished 1.5% lower, and consumer staples retreated 1.1%.

China said it would continue to push the application of artificial intelligence (AI) in the daily economy and that ChatGPT-like technology had broad applications.

Shares in AI companies edged up 0.6%.

Alibaba Group Holding Ltd plunged 5.4% amid geopolitical tensions, even as the company reported better-than-expected quarterly revenue on Thursday, helped by China scrapping COVID-19 curbs and the company’s efforts to cut costs.

Meanwhile, analysts expect some improvements in the upcoming factory manufacturing data due on March 1, as Beijing’s exit from its zero-COVID strategy should boost economic activity.

“February’s manufacturing PMI data will be a key mover of China’s financial markets,” analysts at ANZ said in a note.