Chinese Stocks Slide after Biden-Xi Meeting

Stocks of major Chinese companies, including Alibaba (BABA), JD.com (JD), NIO (NIO), and XPeng (XPEV), were trending lower in trading on Thursday against the backdrop of a meeting between Chinese President Xi Jinping and the U.S. President Joe Biden. The two leaders of the world’s biggest economies met in San Francisco on the sidelines of the Asia-Pacific Economic Cooperation conference.

After the meeting, Biden vowed to “keep the lines of communication open” while Xi was “willing to pick up the phone.” While the two heads spoke on a wide variety of issues, it was interesting to note that Xi Jinping’s visit to the U.S. comes at a time when China’s economic recovery from the COVID-19 pandemic has been hampered by growing debt. There have also been reports that foreign investment in China is tapering off.

The Chinese side referred to the restrictions imposed by the U.S. on chips and semiconductor manufacturing equipment, stating, “Stifling China’s technological progress is nothing but a move to contain China’s high-quality development and deprive the Chinese people of their right to development.”

President Biden gave no indications of rolling back these restrictions following the meeting.

The chip restrictions are hampering companies like Alibaba big time, as it warned today that it was putting off the spin-off of its Cloud Intelligence unit. Indeed, this business could be adversely impacted by these restrictions.

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