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The large-cap CSI300 index was down 0.5% by the lunch break, while the Shanghai Composite Index declined 0.4%. In Hong Kong, the Hang Seng Index fell 0.8%.
The September 24 meeting between Trump and Xi is being closely watched for signs of whether the two countries will extend a trade truce agreed last year that helped avert a major shock to the global economy.
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Oxford Economics said in a report that the meeting could make the US-China relationship more predictable, but trade, technology, and security policies were likely to remain structurally restrictive. The think tank described the likely outlook as a calmer but not closer relationship.
Europe adds to pressure on Chinese stocks
Investors were also assessing rising trade tensions between China and Europe. The European Central Bank said on Tuesday that China’s industrial transformation was putting pressure on European companies by squeezing them out of global markets.Fitch Ratings said China’s trade shock had affected the euro zone, with export-oriented Germany particularly exposed. The ratings agency cut its forecast for China’s 2026 economic growth by 0.1 percentage point to 4.5%, citing growing economic imbalances.
Chinese automakers were among the sectors under pressure. An index tracking carmakers fell 0.6%, while an index of new-energy vehicle companies declined nearly 1%.
The weakness followed calls from some European auto executives and politicians for local-content requirements and broader tariffs aimed at limiting vehicle sales from China.
Property stocks buck broader market trend
Chinese property stocks moved higher, however, amid signs of renewed government support for the troubled sector.
Property shares in both mainland China and Hong Kong jumped after reports that Chinese regulators had asked some banks not to classify overdue loans to China Vanke as non-performing and to extend repayment deadlines for the state-backed developer.
The move provided a boost to the property sector, which has remained under pressure from weak demand, high debt levels, and a prolonged housing downturn.
Tech rally loses momentum
A recent rebound in technology stocks also showed signs of losing momentum in both mainland China and Hong Kong.
The mixed sector performance highlighted cautious investor sentiment ahead of the Trump-Xi meeting, as markets weighed the possibility of improved US-China stability against continued restrictions on trade, technology, and strategic industries.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
