Photo: Xinhua

China's A shares rallied on Friday amid resounding signals for the Chinese economy from the annual Central Economic Work Conference, and Washington's reported plan to roll back tariffs on Chinese imports due on December 15.

Reversing Thursday's decline, the benchmark Shanghai Composite Index opened 0.76 percent up on Friday, while the Shenzhen Component Index soared 0.89 percent and the blue-chip CSI300 index rose 1.02 percent. The Hang Seng Index opened at monthly high, up 1.85 percent.

The Chinese yuan also rose more than 400 points to 6.9613 in onshore trade as of 9:40 am on Friday.

The Yuan's rising followed the annual Central Economic Work Conference which was held in Beijing from Tuesday to Thursday, charting the course for China's economic policy in the coming year. On Thursday US President Donald Trump tweeted that the US is "getting VERY close to a BIG DEAL with China. They want it, and so do we!". US media has claimed that the phase-one trade deal between China and the US has been reached.

Chinese and global investors are gauging how China will map out its economic development route in 2020 amid a spiraling trade war with the US and rising global uncertainties at the tone-setting conference on Thursday. Chinese policymakers' clear development path, which prioritizes stability and includes a slew of policy tools, has reinforced confidence in the Chinese economy, observers said.

"The meeting gave important instructions regarding employment, people's livelihood, infrastructure construction and other sectors, all of which offered a boost to the stock market. It has given China's stock market confidence that the economy will maintain steady growth, particularly in the face of adverse conditions such as the global economic downturn," Guo Xiaobei, a researcher with China Minsheng Bank, told the Global Times on Friday.

Meanwhile, policymakers' commitment to improving financial-sector infrastructure also bodes well for the healthy and stable development of capital markets, analysts said.

The market had been haunted by US President Donald Trump's latest round of proposed tariffs on $160 billion worth of Chinese shipments, which is supposed to take effect on December 15. Chinese analysts suggest that Chinese negotiators' bottom line for a phase-one deal to be proceed ahead should be the scrapping of these tariffs. 

Trump has reportedly planned to delay the additional tariffs, placating not only the Chinese financial market but also the US and global markets. 

The Dow Jones has gained 0.8 percent to 28,132.05 on Thursday (US time), while the S&P 500 has risen 0.86 percent to 3168.57, and the Nasdaq Composite has advanced 0.73 percent to 8,717.32.

A Chinese stock commentator who prefers not to be named told the Global Times that the US stock market could be hit harder if progress in the trade talks is stalled, as the tariffs due on December 15 involve taxes on millions of consumer goods and could inflict serious harm to the US economy.  

While some Western media reports suggest US trade negotiators have agreed upon the terms of a phase-one deal with China - awaiting Trump's approval - Chinese observers have warned that the market should not be overly optimistic and reliant on the influence of the trade talks. 

"No progress will be made unless a final deal with the US is signed," said the anonymous Chinese stock commentator. 

Global Times