Chinese regulators are quick to reassure investors as interest rates and the renminbi fall

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Chinese regulators sought to reassure markets on Monday as tariffs and the renminbi extended losses at the start of the year, following weak economic data and political uncertainty ahead of Donald Trump’s inauguration.

China’s CSI 300 index fell 0.2 percent on Monday and fell 4.1 percent in the first three trading days of the year, marking the worst start to 2025 among the -major Asian indices.

Small-cap stocks in the CSI 2000 are down 6.6 percent since the start of the year. Hong Kong’s Hang Seng index fell 0.4 percent on Monday and is down 1.2 percent so far this year.

The decline came as China’s stock exchange held meetings with international investors and the central bank reaffirmed its determination to keep the currency stable, with Trump threatening. has significantly increased tariffs on Chinese imports coming.

“Right now everyone is wondering what Trump 2.0 will bring,” said Jason Lui, head of Asia-Pacific equity and strategy at BNP Paribas. “It makes sense for investors to try to make a profit.”

The Chinese currency fell to a 15-month low of Rmb7.33 to the dollar on Monday, despite the People’s Bank of China holding its daily trading group for the onshore renminbi. The pressure to sell Chinese currency is often associated with low pressure Chinese currencysaid analysts.

Limited production points, a two-year high for the dollar index and Trump’s impending return have all contributed to external pressure on Chinese stocks, said Kevin Liu, strategist with CICC.

The Shanghai and Shenzhen exchanges sought to reassure investors that China’s economy is underpinned by “firm foundations and solidity” at a weekly meeting with foreign institutions to “solicit comments and suggestions” on the next steps. -rao of China’s finances, they said on Sunday.

The central bank on Monday kept the daily fixing rate – the central point at which the renminbi is allowed to trade 2 percent in any direction against the dollar – at Rmb7.19, despite selling cash pressure.

Its newspaper, Financial News, said the central bank would “resolutely guard against the risk of exchange rate appreciation and maintain the fundamental stability” of the renminbi.

It added that the central bank’s “past experience of multiple appreciations and devaluations” shows it has “adequate” resources to keep the exchange rate “stable”.

In another sign of weak sentiment, investors continued to buy long-term debt, as concerns about weak domestic consumption strengthened bets that the PBoC will ease monetary policy.

The price of China’s 10-year government bond fell 0.015 percent to 1.61 percent on Monday, after falling as low as 1.6 percent last Thursday. Bond yields move in a different direction than prices.

The weak opening for the year comes despite announcements from Beijing that it wants to increase domestic consumption after a prolonged commodity crisis.

China’s rubber-stamp parliament is expected to meet in March to outline its economic policy for what is expected to be a tough year.

“About the important things you should look for in 2025. . . we think investors need to see more about consumption,” said Winnie Wu, chief equity strategist at China Bank of America, adding that government support for the private sector and youth employment it is important.

Despite a bad start to 2025, analysts noted that China’s tariffs had a strong 2024 after a long recession, with the CSI 300 ending the year at 14.7 percent.

“We think that the overestimation is over,” Wu said.