Chinese stocks rise slightly despite deepening factory deflation
Mainland Chinese stocks gained slightly on Wednesday after U.S. President Donald Trump said trade negotiations with Beijing were going well, but the gains were limited by factory deflation as companies cut prices amid weakening demand. Hong Kong stocks slipped slightly. The Shanghai Composite rose 0.4% to around 3,510, while the Shenzhen Component climbed 0.5% to 10,640 on Wednesday, with Chinese stocks reaching multi-month highs following the release of key inflation data. Consumer prices in China rose slightly by 0.1% year-on-year in June, marking the first positive reading in five months and indicating tentative signs of demand stabilization. However, producer prices plummeted by 3.6% — the sharpest decline since July 2023 — as intensified price competition continued to weigh on the industrial sector amid weak domestic consumption. Geopolitical risks also remain as Beijing warned Washington against reinstating tariffs on Chinese goods next month and threatened to retaliate against countries aligning with U.S. efforts to exclude China from global supply chains. Among the stocks that rose were Foxconn Industrial (up 1.2%), Contemporary Amperex (3.3%), and Zhongji Innolight (1.6%).