Chinese Tech Stocks Fall as US-China Trade Truce Fails to Impress
Initial optimism fades as the deal leaves key technology restrictions and tariffs in place, weighing on shares of Alibaba, PDD, and JD.com.
A much-anticipated trade truce between Washington and Beijing failed to sustain investor confidence on Tuesday, as shares of major US-listed Chinese technology companies fell after an initial wave of pre-market optimism gave way to concerns over the deal's significant omissions.
E-commerce giants Alibaba (BABA), PDD Holdings (PDD), and JD.com (JD) saw their shares decline in morning trading. Alibaba dropped 3.36%, while PDD fell 1.50% and JD.com slipped 2.88%. The reversal suggests investors are looking past the headlines and focusing on the unresolved issues that continue to cloud the sector's outlook.
The initial reaction to the agreement, announced late Monday, was decidedly positive. Futures contracts tied to the Nasdaq surged in overnight trading, with some analysts hailing the development as a breakthrough. What Wall Street analysts think of the US-China trade deal had initially included optimistic takes, with some seeing it as a significant de-escalation of geopolitical tensions that have long hampered global markets.
However, that sentiment proved short-lived. As market participants digested the details, it became clear that the truce was limited in scope. The agreement leaves substantial US tariffs on hundreds of billions of dollars of Chinese goods in place and, critically for the tech sector, does not address the stringent restrictions on Chinese access to American semiconductor technology and other critical components.
"The lack of a comprehensive deal continues to create a ceiling for these stocks," said a market analyst. "While any form of dialogue is better than none, the core issues creating uncertainty for Chinese firms—from supply chain integrity to long-term growth strategies in a bifurcated global economy—remain firmly in place."
The persistent friction weighs heavily on companies like Alibaba and JD.com, which are not only central to consumer spending in China but are also deeply integrated into global supply chains and technology ecosystems. The ongoing tech restrictions, in particular, pose a direct threat to their competitiveness and ability to innovate in high-growth areas like cloud computing and artificial intelligence.
Tuesday's price action serves as a stark reminder that the geopolitical overhang on Chinese equities is far from resolved. According to a report from Benzinga, the failure to impress investors underscores the deep-seated skepticism regarding the long-term stability of US-China economic relations. While the truce, which includes some US tariff reductions in exchange for Chinese purchases of agricultural goods, eases immediate tensions, it functions more as a temporary pause than a foundational resolution. For investors in Chinese technology, the path forward remains contingent on a more substantive and lasting agreement.