Chinese stocks — according to the CSI 300 Index (000300.SS) — hit a one-month high on stimulus optimism from the government and better-than-expected export data despite concerns about the impact of President-Elect Donald Trump's proposed tariffs.

China Beige Book International managing director Shehzad Qazi joins Catalysts host Seana Smith to discuss what investors need to know about China's economy and market.

"I think we have to figure out what that stimulus is really going to be about. I think some of the more bullish voices are probably going to be disappointed because what you're about to get, I think, is a big chunk of money, which is really going to be spent on recycling debt in China," Qazi tells Yahoo Finance.

"You're not getting a more muscular housing rescue package. You're certainly not getting a consumer or household-focused stimulus package of the nature even that we are used to out here in the West. So I think we need to keep our expectations modest for now while realizing they want to save some of the firepower for the future."

Qazi states China is taking the threat of Trump's tariff proposals "very, very seriously, which is why they probably want to make sure that they've got the fiscal power or the firepower ready when Trump tariffs do go into effect."

China could be poised to exert export controls on "critical minerals," Qazi outlines the nation's possible retaliatory actions against the US. Chinese officials could also blacklist US companies to force the hand of executives pressuring Congress and the White House to reconsider.

"But I think their toolkit at the end of the day will be limited if President Trump comes in with his team and wants to go very, very aggressive. I think there's going to be a lot of pain felt on the Chinese side," Qazi says.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

This post was written by Naomi Buchanan.