Trump’s Return Spurs Uncertainty in Chinese Markets

Beijing faces growing economic concerns as Donald Trump prepares to assume office once again. His anticipated policies, including potential new tariffs, have contributed to a drop in the Chinese yuan, which recently hit a 16-month low against the U.S. dollar. Following a volatile end to 2024, China's stock market has shown signs of instability, with the CSI 300 index declining over 4% at the start of 2025.

In response to the declining yuan, the People's Bank of China has pledged to maintain currency stability and announced plans for a significant bond sale in Hong Kong to manage exchange rates. The bank's daily reference rate was set above analysts' expectations, indicating intervention to support the currency.

Experts warn that if Trump follows through on threats to impose additional tariffs on Chinese goods during his first days in office, it could further weaken the yuan and hamper China’s export-driven growth. As the country's GDP growth data looms, analysts predict further fiscal easing from the Chinese government and increased efforts to stimulate domestic consumption amidst mounting external pressures.

With uncertainty on the horizon, businesses and investors closely watch the developments as Trump's inauguration approaches, raising concerns about the potential re-emergence of a trade war.