China and Hong Kong stock markets witnessed a positive momentum on Thursday, driven by growing optimism among investors about a potential breakthrough in trade negotiations between the United States and China, despite the latest round of tariff hikes by the U.S.

The rise in the stock market comes even as U.S. President Donald Trump announced an increase in tariffs on Chinese imports, a move that could have triggered market uncertainty. Instead, investors appeared to be betting on the possibility that this step is more of a strategic move rather than a sign of worsening relations.

“Some optimistic investors still believe in the end, the two sides will sit down and make a deal,” said market experts, reflecting a broader sentiment of hope that negotiations will resume between the world’s two largest economies.

Tariff Hike Seen as a Negotiation Strategy

According to Kai Zhan, an international partner at Chinese law firm Yuanda, the latest developments suggest that President Trump is using tariffs more as a bargaining chip than an aggressive trade weapon.

“Trump is using tariffs as a negotiation tactic rather than acting irrationally,” Zhan noted, adding that this perception has contributed to the calm response in the Asian equity markets.

Zhan also pointed out that the temporary tariff exemptions offered by the White House to several other countries have given investors some reassurance. These exemptions are being seen as a potential window for China to negotiate better terms, further fueling optimism in the market.

Market Support From Policy and State-Owned Enterprises

In addition to trade hopes, investors are also drawing confidence from ongoing support measures by the Chinese government and state-owned enterprises. These entities are expected to step in, if needed, to stabilize markets and protect the economy from external shocks.

The combination of possible trade negotiations and domestic policy backing has created a cushion for market participants, making them less reactive to short-term volatility.

Investors Remain Cautiously Hopeful

Despite the geopolitical tensions, the market’s upward movement indicates a strong belief that diplomacy will prevail. Investors are seemingly willing to look past the current tariff increase, placing their trust in potential behind-the-scenes talks and strategic decision-making by both nations.