At the midday break, the Shanghai Composite index fell 0.2% to 3,587.69 points after climbing for five straight weeks to a 3-1/2-year high.

China’s blue-chip CSI300 index shed 0.2%.

Commodity-related companies pared last week’s rally spurred by Beijing’s “anti-involution” campaign, with indexes tracking steel and coal sectors losing 1.7% and 2.9%, respectively, to weigh on the markets.

Beijing launched an “anti-involution” campaign this month to tackle “disorderly price competition,” or overcapacity, amid persistent deflationary pressure at home and trade curbs abroad.

Insurers added 2.4% to rank among the best performers after the industry body cut the reference rate for life insurance products.

Top US and Chinese economic officials will resume talks in Stockholmlater in the day, likely extending their trade truce by three months and preventing the implementation of higher tariffs.

CITIC Securities says the recent onshore bullish run is mostly liquidity-driven, and whether it can become a longer-lasting bull market will depend on actual improvements in economic fundamentals.

Hong Kong’s benchmark Hang Seng Index rose 0.4% to 25,490.45 and continued to hover near the highest since November 2021.

Insurers AIA, Ping An and China Life gained between 3.2% and 4.5%.

However, the tech index lost 0.6%.

Elsewhere, Goldman Sachs raised its 12-month MSCI China index target to 90 from 85, representing 11% upside potential, due to improved US-China relations, reduced regulatory risks, stronger yuan and supportive liquidity conditions.