Asian stocks are jittery as China concerns continue to grow By Investing.com

For the most part, Asian stock markets failed to show signs of stability as investors awaited key economic data that could influence the United States Federal Reserve’s decision on interest rate cuts.

By 00:30 EST (04:30 GMT), the index was down 0.1 percent at 38,634.50, while China’s was down 0.52 percent at 2,796.48. it similarly declined, changing hands at 17,601.00, or -0.51% on the day.

The negative market sentiment follows a set of positive spending numbers released on Friday, which led to a reduced likelihood of a significant half-point rate cut by the Fed. The next ISM US manufacturing survey and highly anticipated jobs data, due out on Friday, are expected to play a key role in the Fed’s rate decision-making process.

On the other hand, investor concerns around China continue to grow.

“The economy was subjected to the double shock of weather and weak demand in August. We expect deterioration in activities and better CPI for food reflation. The growth target of “around 5%” could be at risk,” Citigroup economists wrote in a note on Tuesday.

“Even with the acceleration of government bond issuance, we doubt how effectively income could be deployed for investment before controls on debt management are loosened.”

Sanergy Group plunged 99% on Tuesday after Hong Kong’s Securities and Futures Commission told investors to avoid trading the stock given the high concentration of shares.

On the other hand, Reuters reported that Tesla plans to produce a six-seater variant of its Model Y car in China from late 2025.

China-Japan tensions are rising

Last weekend, tensions between China and Japan escalated as Bloomberg News reported that China threatened severe economic consequences if Japan further tightened restrictions on the sale and maintenance of chip-making equipment to Chinese firms.

It adds complexity to US-led efforts to limit China’s access to advanced technology and could have significant implications for the semiconductor industry.

Accordingly, high-level Chinese officials expressed their position in meetings with Japanese officials. Toyota Motor (NYSE: ) Corp., a key player in Japan’s chip policy, has privately expressed concern to Tokyo about potential Chinese retaliation that could cut off Japan’s access to vital minerals needed to make cars.

Toyota’s involvement in Japan’s semiconductor strategy is underscored by its investment in a new chip campus by Taiwan Semiconductor Manufacturing (NYSE: ) in Kumamoto.

This investment, along with concerns from Tokyo Electron Ltd. (TYO:)., a semiconductor equipment maker that could be directly affected by new Japanese export controls, is a major factor for Japanese policymakers.

The US has actively encouraged Japan to implement additional restrictions on companies such as Tokyo Electron from selling advanced chip-making tools to China.

This is part of a larger campaign to curtail China’s advances in the semiconductor sector. In response to China’s export restrictions on materials such as gallium, germanium and graphite last year, US and Japanese officials have developed strategies to ensure a reliable supply of these critical minerals.