China, Hong Kong stocks decline as Trump-Xi talks face investor scepticism

China and Hong Kong stocks extended their losses on Thursday as investors remained sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping would deliver a broader breakthrough in relations between the world's two largest economies, Reuters reported.

China's blue-chip CSI300 index fell 1.3% by the lunch break, while the Shanghai Composite index lost about 1%. Hong Kong's benchmark Hang Seng Index was down 0.5%.

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Trump welcomed Xi to Washington on Wednesday for a three-day visit that is set to test relations between the two economic powers. Xi's trip, his first to the United States in nearly three years, was not expected to produce major breakthroughs.

However, the two countries agreed to extend their trade truce by two months, US Treasury Secretary Scott Bessent said, according to Reuters. The extension is shorter than the one-year rollover that markets had expected, but it could help preserve stability in bilateral trade relations, UBS said in a sales note cited by Reuters.

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Investor sentiment was also weighed down by the absence of a delegation of Chinese business leaders during Xi's visit. Beijing had sought to bring the executives to Washington for meetings with Trump, but the delegation did not materialise, Reuters reported, citing sources familiar with the matter.

Most sectors were lower by midday, with gold equities, materials and AI hardware stocks among the biggest decliners. The weakness also tracked overnight losses on Wall Street, where higher oil prices and rising US Treasury yields pressured equities.

Energy and shipping stocks listed in Hong Kong were among the stronger performers, providing some support to the broader market.

Investors also remained focused on the outlook for technology trade between Washington and Beijing. Sanjeev Rana, head of North Asia semiconductor research at CLSA, said expectations remained for the two countries to cooperate on AI development and safety, but he did not foresee any easing of US restrictions on chip exports to China, Reuters reported.

Some investors took a more constructive view of the longer-term relationship. Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management, said US-China relations could gradually move away from confrontation towards greater understanding, compromise and coexistence, according to Reuters.

For investors, the focus now shifts to whether the Trump-Xi talks can produce concrete agreements beyond the extension of the trade truce, particularly on tariffs, technology restrictions and broader economic cooperation.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)