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 China’s big internet companies, and are looking for more specific commitments from the government.
The Chinese economy is likely to contract in the second quarter, as Covid lockdowns wreak havoc on activity. Consumer spending and factory output both shrank sharply last month, while unemployment surged to the highest level since the initial coronavirus outbreak in early 2020.
Looking at the fine print
Liu’s comments were welcomed by tech executives at the symposium.
The broader US market 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 do believe the meeting suggests another positive regulatory signal towards the platform economy and supportive attitude of internet companies seeking listing in overseas markets,” said Citi analysts on Wednesday.
But the lack of detail from Liu weighed on Asian markets on Wednesday.
The Hang Seng Tech Index, a key index for Chinese tech firms listed in Hong Kong, dropped as much as 2.3% on Wednesday. It was last down 0.3%. The benchmark Hang Seng Index closed up 0.2% after choppy trading.
The “Chinese government appears to be running out of policy tools to support growth,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
The escalating downside risks for growth might have prompted the leadership to end the tech crackdown quickly, Cheung said. But it may take more time to repair investors’ confidence, he added.
Recent earnings show how much China’s tech industry continues to struggle.