For years, the stock exchanges in Shanghai and Hong Kong have been underperforming, and along with other Chinese stock markets, they have faced the worst declines in the world so far this year. This necessitated significant financial intervention from Beijing, but the authorities went further by reinstating a familiar figure to take charge of stock market regulation.

59-year-old Wu Qing, who served as the president of the Shanghai Stock Exchange from 2016 to 2018, has been appointed to lead the regulatory body once more. The Shanghai Stock Exchange is the largest in mainland China, and Beijing considered acquiring the Hong Kong Stock Exchange essential to bolstering the collective might of China's stock exchanges against New York. This ambition was not entirely unfounded, given that Alibaba's New York Stock Exchange listing in 2014 set a record with a $169 billion issuance. President-elect Donald Trump quickly met with Jack Ma, the founder of Alibaba, in New York before engaging in talks with President Xi Jinping. "Jack and I are going to do great things together!" Trump proclaimed, but these plans came to naught as the United States initiated a trade war against China something President Joe Biden intensified. When Biden designated China as the USA's strategic competitor in early 2021, the Shanghai and Hong Kong stock exchanges were at their peak; since then, shares have lost over $6 trillion in value, a significant loss even by Chinese standards, especially while New York maintains and even strengthens its global leadership.

At the end of January, state-backed rescue measures intended to save the stock market and the yuan sparked a rebound in share prices in Shanghai and Hong Kong. On Tuesday, the sovereign wealth fund Huijin announced it would accelerate its share purchasing program. The government also issued a statement on Wednesday, confirming its full support for the sovereign fund's actions.

Yet, the fundamental problems in China persist: The massive real estate bubble is bursting with more than 50 million homes vacant and Evergrande, the largest property developer facing over $300 billion in losses, is being liquidated. Meanwhile, the US-China trade war continues.

US-China Negotiations

Jake Sullivan, National Security Advisor to Joe Biden, warned his Chinese counterpart, Foreign Minister Wang Yi, that serious consequences would follow if China supplies chips to Russia that are listed on the sanctions list. However, officials in Beijing are trying to emphasize the positives: a joint fentanyl commission has been formed, in which China and the United States are working together to prevent the production and distribution of the synthetic drug in the USA, where it is linked to over 50,000 deaths annually.

The Beijing-based China Daily proudly reported preparations for an economic summit where a Chinese vice premier is expected to participate. Last year, US Treasury Secretary Janet Yellen visited Beijing, where she cautiously expressed opposition to the trade war, suggesting that tariffs exacerbate inflation in the United States. In contrast, Donald Trump has proposed imposing a 60% tariff on Chinese goods if re-elected, a move that would completely disrupt global trade.