Chinese tech stocks are remarkably resilient this year, in a challenge to the lasting power of US exceptionalism, says Shuli Ren for Bloomberg Opinion.
File photo of EV cars inside BYD's first electric vehicle factory in Southeast Asia, in Rayong, Thailand, Jul 4, 2024. considering the blizzard of tariffs United States President Donald Trump is unleashing on Beijing. The Hang Seng Tech Index, which tracks the largest Chinese stocks listing in Hong Kong, wobbled on Friday after a surprise announcement of a 10 per cent levy to be introduced on Tuesday .
In addition, to appease the president, Mexico is raising its duties on Chinese imports, reining in companies that use the country as a launchpad to gain easier access to American consumers. All of these trade barriers are hurting an economy that is more dependent on exports growth than during Trump’s first trade war in 2018.
Why are Chinese stocks so resilient, and what does this mean to the US exceptionalism thesis that the dollar and American equities will continue to outperform – which global asset managers overwhelmingly, but apprehensively, embraced entering 2025?One possible explanation is that even if the Trump administration sees Beijing as the real foe, a chaotic implementation of priorities and policies at the White House gives China the much-needed breathing room to fortify its tech boom.
Last month, while Musk was busy with social media battles over the Department of Government Efficiency’s cost-cutting efforts, BYD added advanced driver-assistance features across most of its line-up for no extra cost. Everyone seems to have an opinion about what Trump ultimately wants from China, even though his true intent is still inscrutable. Some embrace a Nixon 2.0 vision, believing that Washington will strike a big deal with Beijing that solves tensions over trade, Taiwan and the US government’s ballooning debt.
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