China stocks closed lower on Tuesday as Beijing and Washington exchanged criticism over technological transfer and trade, showing little signs of resolving the year-long tariff dispute. At the close, the Shanghai Composite index was down 1% at 2,862.28 points, while the blue-chip CSI300 index ended 0.9% lower.
CSI300's financial sector sub-index ended lower by 0.6%, the consumer staples sector was down 1.6%, the real estate index closed 0.5% weaker and the healthcare sub-index ended down 1.8%.
The smaller Shenzhen index ended down 1.4% and the start-up board ChiNext Composite index was weaker by 0.9%.
The US government said on Monday that China was pursuing a "blame game" in recent public statements and a weekend white paper that misrepresented the trade negotiations between the world's two largest economies.
China warned students and academics on Monday about risks involved in studying in the United States, pointing to limits on the duration of visas and visa refusals.
China's factory activity expanded at a steady but modest pace in May, a private survey showed, but analysts say front-loading of exports by firms to the United States to avoid higher tariffs masked underlying weakness in the economy.
Investors need to be patient for the moment, as the market correction since the benchmark Shanghai index hit a 15-month high of 3,288.45 on April 8 is not sufficient, Haitong Securities said in report.
The brokerage also noted that a correction on Wall Street will curb global risk appetite and accelerate foreign outflows.
The Nasdaq tumbled 1.6% on Monday, confirming a correction as it was dragged down by Alphabet, Facebook and Amazon.com on fears the companies are the targets of US government antitrust regulators.
Huatai Securities' analysts wrote in a note on Tuesday that the weakening yuan may support share prices, if it does not spur capital outflows, because it would ease pressure on exporters.
At 0717 GMT, the yuan was quoted at 6.9084 per US dollar, 0.08% weaker than the previous close.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.4%, while Japan's Nikkei index closed almost flat.
The largest percentage losses in the Shanghai index were Gansu Dunhuang Seed Group Co Ltd, Wanxiang Doneed Co Ltd and Shanghai Industrial Development Co Ltd, all down by 10%.
So far this year, the Shanghai stock index is up 14.8% and the CSI300 rose 19.5%. Shanghai stocks dropped 1.3% this month.
About 18.85 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 21.59 billion. ** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.
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