China’s equity market registered a decline on Thursday, pressured by concerns regarding potential escalation in trade frictions between China and the European Union (EU). The Shanghai Composite decreased 1.59% to settle at 3,707.5, whereas the Shenzhen Component shed 2.43% to reach 11,816.8. Both benchmarks reached their lowest levels since July 2025.
Investor apprehension mounted as the European Union contemplated fresh trade actions targeting Chinese goods, specifically furniture and scooters. Germany is anticipated to advocate for limitations on chemicals, machinery, and potentially pharmaceuticals, building on last week’s accord to restrict Chinese car exports to Europe.
China’s government has reportedly characterized the car export accord as a temporary accommodation and cautioned that retaliatory measures may be taken should the European Union implement additional trade barriers. This situation has amplified investor apprehension and exerted downward pressure on equities in China.
Shares in the artificial intelligence sector registered significant declines throughout the trading day. Cambricon Technologies' stock decreased by 3.43%, Hygon Information Technology’s shares shed 3.79%, Zhongji Innolight’s stock price retreated 5.19%, Eoptolink Technology experienced a drop of 7.49%, and Victory Giant Technology’s value diminished by 4.69%.