The Shanghai Composite index was up 0.5 per cent at the midday break, after flirting with losses.
China has retaliated with its own set of tariffs, and has accused the U.S. of launching the largest trade war in economic history. The yuan market at 0414 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.8571 6.844 -0.19% Spot yuan 6.8703 6.861 -0.14% Divergence from 0.19% midpoint* Spot change YTD -5.29% Spot change since 2005 20.47% revaluation Key indexes: Item Current Previous Change Thomson 92.76 92.87 -0.1 Reuters/HKEX CNH index Dollar index 94.143 94.133 0.0 *Divergence of the dollar/yuan exchange rate. And on Friday, Chinese technology stocks listed in Hong Kong, including Lenovo and ZTE Corp, slumped on a Bloomberg report that the systems of multiple USA companies had been compromised by malicious computer chips inserted by Chinese spies. The gauges followed Hong Kong's Hang Seng index, which remained open during the holiday and slid 4.38 percent over its course.
However, Beijing has refused to yield to USA complaints that the Chinese government steals or pressures foreign companies into handing over technology. Shenzhen-listed shares of ZTE was down over 8 per cent at close. This marks the biggest monthly drop since February.
Some of the liquidity unleashed will be used to pay back the 450 billion yuan (USD 65 billion) of the medium-term lending facility that will mature on October 15, state-run Xinhua news agency reported.
"The PBOC will continue to take necessary measures to stabilize market expectations and keep the foreign exchange market running smoothly", it said. "Liquidity is not the issue". At present, the interest rate on China's benchmark bond is about 60 basis points higher than on the USA one.
China's IT sector fell sharply today, tumbling over 3.4 per cent in early trading. Xie Yaxuan, chief economist at China Merchants Securities said in a note that the timing of the announcement was a deliberate move by Beijing "to offset the shock from declines in global stock and bond markets to the domestic economy".
Chinese stocks tumbled Monday as investors returned to a pile-up of negative news that accumulated over a week-long holiday, from disappointing economic data to worsening tensions with the United States. That compares with the 3.227 per cent yield for USA bonds., the highest level since May, 2011.
The tightly controlled yuan has lost nearly 10 per cent of its value against the dollar this year. Before trading began on Monday, the PBOC set the midpoint of the yuan's daily trading band at 6.8957 per dollar, its weakest level since May 11, 2017.
But the bigger conundrum for USD/CNH and the yuan is that of the 7.00 handle.
China's yuan is forecast to pare some of its recent losses against the dollar over the coming year on hopes that risks from an escalating US-China trade war and a deep sell-off in emerging markets will subside, a Reuters poll found.