Asia markets mostly rose on Wednesday as investors took an escalation of trade tensions between the U.S. and China in their stride.
Japan's Nikkei 225 was up 1.08 percent to close at 23,672.52, and the Topix index added 1.46 percent to close at 1,785.66. The Bank of Japan kept its monetary policy steady and maintained an upbeat view on the economy. In its policy statement, the central bank said it expects Japan's economy to "continue its moderate expansion" and that domestic demand is likely to follow an uptrend.
Premier Li Keqiang addressed the World Economic Forum in Tianjin on Wednesday, where he acknowledged that China is confronted by a host of challenges and is facing "greater difficulties in keeping stable performance of the Chinese economy." But he insisted that China was comfortable with its economic situation, and that Beijing has prepared sufficient policy tools to boost the country's resilience in coping with various difficulties.
Li's comments followed an escalation in trade tensions between the United States and China.
China announced tariffs targeting more than 5,000 U.S. products — worth about $60 billion — will go into effect on Sept. 24. However, China will put a 10 percent tariff on some goods it had previously earmarked for a 20 percent levy. At the same time, China's commerce ministry said that it filed a complaint to the World Trade Organization (WTO) against the U.S.
Beijing's announcement came after the Trump administration said the U.S. will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year.
"China is limited in its scope for direct retaliation from here, with only $50 billion worth of imports left to target, but so far has refrained from threatening to tariff all imports from the U.S.," Jo Masters from ANZ Research said in a morning note.
The complaint to the WTO risks provoking further measures from the U.S. and could eventually escalate to all American imports from China being taxed, Masters added.
"Increasingly it looks like this will be a prolonged dispute. And as it escalates, so does the economic fall-out," Masters said.
Amid all that, China's holdings of U.S. Treasury bills, notes and bonds dropped to a six month low of $1.171 trillion in July, from $1.178 trillion in June. That data is watched because dumping Treasury securities is viewed as one way China could retaliate against the U.S. in the ongoing trade dispute. Still, strategists are skeptical China is really trying to send a message this way.