China tries to come to terms with Big Tech as economic challenges mount
Chinese stocks on Wall Street surged after Liu’s comments, but mostly declined Wednesday in Hong Kong. This suggests that the market is still deeply concerned about the growth prospects of major Chinese internet companies and awaits more specific commitments from the government.
China’s economy is expected to contract in the second quarter as Covid lockdowns wreak havoc on activity. Consumer spending and factory output both fell sharply last month, while unemployment hit its highest level since the first coronavirus outbreak in early 2020.
Looking at the fine print
Liu’s comments were well received by technology executives at the symposium.
The broader US market has also closed higher on Tuesday. The Dow Jones Industrial Average closed up 1.3%. The S&P 500 rose 2% and the Nasdaq Composite gained 2.8%.
“While the [symposium] did not include much new context in our view, we believe the meeting suggests another positive regulatory signal towards the platform economy and a supportive stance for internet companies seeking to list on foreign markets,” said Wednesday. Citi analysts.
But Liu’s lack of details weighed on Asian markets on Wednesday.
The Hang Seng Tech Index, a key index for Chinese tech companies listed in Hong Kong, fell 2.3% onot Wednesday. It was last down 0.3%. The benchmark Hang Seng closed 0.2% higher after choppy trading.
The “Chinese government seems to lack the policy tools to support growth,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank.
Escalating downside risks to growth could have prompted leaders to quickly end the tech crackdown, Cheung said. But it may take longer to restore investor confidence, he added.
Recent earnings show how China’s tech industry continues to struggle.