Trade-War

Previously, investors focused on financial news. Since Trump’s return, they also needed to pay attention to his Twitter (a private version). The trade war continued to escalate, leading to a sharp decline on April 7th, which was quickly followed by a rebound. This time, though, are people still willing to jump in?

Background Review

On April 7, 2025, following the impact of the U.S. implementation of an “equivalency tariff” policy, global stock markets experienced a “Black Monday.” The A-share market plunged, with the Shanghai Composite Index falling by 7.34% and the Shenzhen Component Index plummeting by 12.5%, with over 4,300 stocks declining by more than 9%. The Hang Seng Index in Hong Kong also fell by 13.22%, along with European and U.S. stock indices exceeding declines of 4%. China subsequently stabilized the market through state-owned enterprise (SOE) purchases and intervention by Huishang Securities.

Let’s start with some tangential points, the differences between Chinese-style socialism and capitalism. From the mouths of the older generation, we heard that to get rich, you first needed to build roads. China’s infrastructure construction – these things are all funded by the state, and in a capitalist society, they would be contracted out. In remote areas, there’s no profit motive, so companies wouldn’t willingly take on those projects. Talking too much is getting off-topic, and ordinary people might feel that trade wars don’t have much impact on their lives. However, China’s high-end manufacturing has always been relatively weak. The IT industry I work in – memory, hard drives, CPUs, graphics cards – the core configuration of assembling a computer comes from factories abroad. These components account for 50% of the total cost, and high-end manufacturing is undoubtedly essential. The collision between China and the United States is inevitable.