China’s equity markets exhibited a divergent performance on Friday, recouping earlier declines as participants directed their attention toward anticipated trade discussions between China and the European Union (EU). The Shanghai Composite finished nearly flat at 3,813.8, whereas the Shenzhen Component advanced 0.17% to 12,641.9.

Escalating trade frictions persisted as European industry associations called for prompt EU intervention to address inequitable Chinese trade practices. Concerns were voiced regarding the potential adverse impact on European manufacturers and the possibility of additional job reductions. These discussions follow a three-month review of the EU’s trade imbalance with China and Beijing’s limitations on exports of rare earths and other essential minerals.

Chip and optical equities faced selling pressure as investor sentiment regarding China’s artificial intelligence (AI) initiatives moderated. Elevated stock valuations also contributed to the sector’s downturn. Cambricon Technologies advanced 0.51% and SMIC increased 1.25%, whereas Zhongji Innolight decreased 0.98%, Eoptolink Technology retreated 2.19% and NAURA Technology declined 1.05%.

For the week, both major indexes registered declines. The Shanghai Composite decreased 0.74%, while the Shenzhen Component shed 1.91%, underscoring persistent investor caution.