China's Economic Struggle: Stock Declines Amid Policy Hesitation

China and Hong Kong stocks fell as investors scaled back stimulus expectations following a leadership meeting, against the backdrop of trade tensions and property market challenges. Despite a trade surplus, concerns remain over muted policies and their impact on sectors like property and technology.

In a turbulent trading session, China and Hong Kong stocks ended lower on Tuesday, impacted by waning hopes for immediate economic stimulus. The decline followed a significant Chinese leadership meeting that left investors cautious.

The meeting, led by the Politburo, signaled a focus on expanding domestic demand through proactive policies in 2026, while downplaying the urgency for short-term fiscal measures. This stance has tempered investor expectations, as reflected by the 0.5% drop in the CSI300 Index and a 0.4% decrease in the Shanghai Composite Index. Hong Kong's Hang Seng Index fell 0.8% to a two-week low.

Trade tensions also contributed to market anxiety, as China's trade surplus reached over $1 trillion amid export shifts. However, the lack of decisive action in the property sector, coupled with lenient policies in the tech sector, has fueled market volatility, particularly affecting property, commodity, and tech stocks.

(With inputs from agencies.)