The Shanghai Composite fell 0.2% to below 4,080 while the Shenzhen Component gained 0.3% to 14,070 on Wednesday, with mainland stocks struggling for clear direction as mounting geopolitical tensions between Asia’s two largest economies dampened investor sentiment.
The market reacted to China’s imposition of export controls on military-use products to Japan, following remarks by Prime Minister Sanae Takaichi on Taiwan last year.
The restrictions cover a range of items, including electronics, sensors, and technologies used in shipping and aerospace.
Defense-related stocks were hit, with China Spacesat falling 5.6%, Beijing Leike Defense Technology down 1.3%, and China Aerospace declining 0.8%.
Conversely, technology and artificial intelligence-linked shares continued to outperform, with notable gains from Zhongji Innolight (+2.8%), BlueFocus Intelligent (+7%), and Giga Device Semiconductor (+5.7%).