China’s Market Woes Deepen Amid Real Estate Struggles and Trump-Related Concerns

‘Trump’s Concerns’ Continue to Rattle Chinese Markets

Stocks in China and Hong Kong fell on Thursday, reflecting the ongoing turbulence in global financial markets as Beijing’s recent economic incentives failed to reassure investors. The unease was compounded by reports suggesting that U.S. President-elect Donald Trump is assembling a cabinet filled with figures known for their hawkish stance toward China.

The Shanghai Composite Index and the CSI 300, which tracks the largest listed companies in China, each closed down 1.7%, marking their sharpest decline in nearly a month. Meanwhile, Hong Kong’s Hang Seng Index fell 2%, reaching its lowest level in seven weeks.

Property Sector Fails to Rebound

Efforts by the Chinese government to revive the struggling property sector through tax incentives on housing and land transactions did little to bolster investor confidence. The CSI real estate sub-index dropped by 2.1%, while the Hang Seng Mainland Properties Index tumbled 3.6%. Among the biggest losers was Longfor Properties, which saw its shares dive 7.2% to their lowest point since late September.

Market participants noted that concerns deepened during the afternoon trading session following reports that President-elect Trump is likely to secure Republican control over both houses of Congress once he assumes office in January. This political dominance could make it easier for Trump to push through policies that may strain U.S.-China relations. The nomination of Marco Rubio, a staunch China critic, for Secretary of State further stoked fears that the incoming administration’s policy might extend beyond trade tariffs and encompass broader economic and diplomatic tensions.

“With Trump potentially holding sway over both chambers of Congress and filling his administration with China hawks, there is mounting anxiety over the prospect of new anti-China measures,” said Dickie Wong, executive director of Kingston Securities in Hong Kong.

Mixed Signals in the Tech Sector

While most sectors posted losses, Chinese tech giant Tencent managed a 2.8% rise in its shares after announcing an 8% increase in third-quarter revenues. In contrast, JD.com faced a 1.2% pre-market dip in its U.S.-listed shares as the company reported earnings that missed analysts’ expectations. JD.com attributed the underperformance to the persistent slowdown in the Chinese economy, which has pressured consumers to save more and spend less.

The prolonged real estate crisis, combined with overall economic stagnation and growing job insecurity, has weakened consumer confidence, impacting retail sales and fueling a fierce price war among major e-commerce platforms.

Strained Consumer Spending

Despite the Chinese government introducing a series of measures to stimulate growth, the absence of substantial efforts to boost consumer spending has left many investors disappointed. JD.com revealed that its total revenue rose 5.1% to 260.4 billion yuan ($35.95 billion) for the third quarter, slightly below market projections of 261.45 billion yuan, according to data from the London Stock Exchange Group. Net income attributable to common shareholders climbed 47.8% year-over-year to 11.7 billion yuan for the July-to-September period.

The quarter coincided with a seasonal lull in consumer activity between the major June and November shopping festivals. To attract more customers during this typically quiet period, JD.com ramped up its marketing expenditure by 25.7% to 10 billion yuan, representing 3.8% of net revenue compared to 3.2% in the previous year.

Singles’ Day Boost

This year’s Singles’ Day shopping event, which ran from October 14 to November 11—ten days longer than in previous years—saw a 26.6% increase in sales across all major e-commerce platforms, according to data provider Syntun. Notably, sales of larger household appliances performed better than last year, buoyed by a 150 billion yuan national stimulus package announced in July to encourage consumer spending.

However, analysts point out that the broader economic outlook remains uncertain. “While the extended Singles’ Day event provided a short-term boost, the overall consumption environment is still fragile,” said a market analyst at a major Chinese brokerage. “Many households are prioritizing saving over discretionary spending, driven by economic slowdown fears and job security concerns.”

Political and Economic Crosscurrents

Investor sentiment has been further dampened by fears of more aggressive U.S. policies toward China under the incoming Trump administration. The potential for stricter measures has fueled worries that trade relations may worsen, putting additional pressure on China’s already challenged economy. The combination of sluggish domestic growth, ongoing real estate troubles, and external geopolitical risks is shaping a complicated landscape for both policymakers and market participants.

Dickie Wong’s statement encapsulates the anxiety permeating the market: “The fear is that we may see a shift toward a more confrontational stance that could escalate into measures beyond just tariffs.” Such measures could include new sanctions or limits on Chinese investments in critical sectors, which would add to the economic strain.

Looking Ahead

Beijing’s policymakers face the difficult task of navigating these intertwined domestic and international challenges. To rekindle investor confidence and stabilize the economy, stronger and more targeted measures may be required. Although the recent tax incentives aim to cushion the real estate sector, the persistent drag on consumer sentiment and spending indicates that broader strategies might be necessary.

Whether through more significant fiscal stimulus, enhanced social welfare policies, or bolstered support for struggling sectors, experts agree that China’s path forward must be both assertive and adaptable. At the same time, market observers will be watching closely for signs of how the Trump administration’s China policy will evolve and the implications it will have on global trade and investment.

For now, the cloud of uncertainty lingers over the Chinese economy, with stakeholders wary of potential turbulence ahead.