At the close, the Shanghai Composite index weakened 0.1% to 3,346.84. The blue-chip CSI300 index dropped 0.6%.

In Hong Kong, the benchmark Hang Seng Index was down 1.4% at 23,282.33.

The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index, fell 1.7%.

Car-makers slipped, weighing on both onshore and offshore markets, after BYD slashed prices on some of the models to spur sales as competition heats up.

Its Hong Kong-listed shares dipped 5.9%, while rival Geely Auto tumbled 9.5%.

The CSI All Share Automobiles Index lost 2.9%, the biggest single-day drop in five weeks, while the Hang Seng Automobile Index in Hong Kong tumbled 4.9%.

“The price cuts could put some short-term pressure on earnings,” analysts at Sinolink Securities said in a note.

“It got investors concerned about profitability, and the sector is likely to enter a correction,” analysts said.

Apple supplier stocks also lost some ground after US President Donald Trump threatened tariffs on imported iPhones.

iPhone assembler Luxshare lost 0.2%.

However, China’s yuan has strengthened past the 7.17 level after the central bank tightened the midpoint fixing, and analysts say the firming trend of the currency should lend support to the nation’s stocks.

“We estimate every 1% of renminbi increase versus the US dollar could boost Chinese equities by 3%,” Goldman Sachs’ China equity strategist Kinger Lau wrote in a note.

“Sectors such as consumer discretionary, property, and brokers typically outperform when the yuan appreciates,” he added.