US-listed Chinese tech giants are celebrating a significant market surge today, fueled by optimistic economic indicators and the promise of substantial government intervention. Alibaba (BABA), JD.com (JD), Baidu (BIDU), NIO (NIO), Li Auto (LI), and XPeng (XPEV) all saw impressive gains following a Bloomberg report detailing China’s plans for further fiscal stimulus. This announcement follows a key economic meeting in December and arrives on the heels of encouraging industrial profit figures.
The positive momentum is directly tied to the recent release of October’s industrial profit data, revealing a considerable improvement compared to previous months. According to the Wall Street Journal, industrial profits experienced a 10% year-over-year decline, a marked improvement from September’s staggering 27.1% drop. This positive trend, reported by the National Bureau of Statistics, signifies that Beijing’s stimulus measures are starting to yield tangible results. Yu Weining, a bureau statistician, highlighted the impact of interest rate cuts and liquidity injections in boosting market confidence and production.
This recovery was particularly pronounced in the raw materials and consumer goods sectors, benefiting from a revitalized domestic market and strong export performance. While this signals a broader stabilization in production, challenges remain for some industrial enterprises operating at reduced capacity. The overall picture for the first ten months of 2024 shows a 4.3% year-over-year decline in industrial profits, slightly worse than the 3.5% decline reported for the first nine months. This highlights the ongoing headwinds despite recent progress.
Adding to the positive sentiment, China’s government has committed to a massive 6 trillion yuan ($840 billion) stimulus package aimed at alleviating local government debt and reigniting economic growth. Finance Minister Lan Fo’an confirmed that this plan will allocate 2 trillion yuan annually to local governments until 2026. Further bolstering the initiative, central authorities will issue 800 billion yuan in bonds annually, accumulating to 4 trillion yuan over five years. This ambitious strategy aims to significantly reduce hidden local debts, targeting a reduction from 14.3 trillion yuan to 2.3 trillion yuan by 2028.
Government advisors, as reported by Reuters, are anticipating a 5.0% economic growth target for 2025. This projection is accompanied by expectations of robust fiscal stimulus to counteract potential negative impacts from anticipated US tariff hikes on Chinese exports. The market reacted strongly to this comprehensive plan, indicating investor confidence in China’s ability to navigate economic headwinds.
In terms of stock performance at the close of Wednesday’s trading session: BABA saw a 2.03% increase, reaching $86.91; JD experienced a significant 3.792% jump; BIDU rose 0.99%; NIO climbed 2.78%; LI surged 3.16%; and XPEV increased by 3.25%. These impressive gains underline the market’s positive response to the recent economic news from China.
