July 3, 2018 / 12:44 AM / 4 months ago

Chinese state media call for market calm amid trade frictions

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee/File Photo

SHANGHAI (Reuters) - Chinese state media on Tuesday called a recent sell-off in mainland stock markets an “irrational overreaction” and urged investors not to panic over growing trade frictions between Beijing and Washington.

The comments, made in newspapers such as the Securities Daily and Economic Daily, come as China’s Shanghai bourse dove to more than a two-year low on Monday as the brewing trade war threatens to knock the world’s second-largest economy.

“Intensifying trade frictions between China and the United States is a test that the Chinese economy inevitably had to experience during its rise,” the Economic Daily said.

“We have long anticipated and prepared for this...The impact on the Chinese economy is within a controllable range.”

The Securities Daily newspaper called the slump in the A-share market an overreaction, saying that investors should have confidence in China’s domestic market and that the current macroeconomic situation was stable.

Investors are jittery ahead of a July 6 deadline when the United States is set to impose tariffs on $34 billion worth of goods from China, the epicentre of a heated trade dispute between Washington and major economies that has convulsed financial markets.

Beijing is expected to respond with tariffs of its own on U.S. goods as the trade fight between the world two biggest economies threatens to damage global trade and investment.

Li Yang, director-general of government think-tank National Institution for Finance & Development (NIFD), told the Global Times newspaper that he did not think the financial panic would evolve into a wider financial scare and that authorities had proven effective in the past to pacify market sentiment.

A NIFD report which said that China should be wary of any financial panic stemming from uncertainties appeared briefly online last week before being removed. Li said that report was for internal discussion.

Reporting by Brenda Goh; Editing by Michael Perry

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