US-China Trade Conflict and the Dynamics of Chinese Semiconductor Companies’ Stock Prices

Abstract

Beginning in the spring of 2018, the U.S.-China trade conflict officially began. This paper focuses on the impact of several U.S. tariff increases on China on Chinese exports in this context. As the U.S. stopped supplying chips to China and clamped down on Chinese semiconductor industry sales in the U.S., it led to a stock market shock in the Chinese semiconductor industry. Using the empirical results in the daily stock indices so far in 2018, it can be concluded that the impact of the U.S. tariff hikes on China's semiconductor industry is temporary and, on the contrary, may have a greater impact on the U.S. import and export trade. Not only that, this action could activate the development of Chinese national technology in the short term. The U.S. sanctions against China also further illustrate that China, as the second-largest economy in the world, has threatened the economic position of the U.S., and therefore the tariff increase is nothing more than a threat to control China.