China Stocks Routed Amid Growth Worries; Alibaba Drops 4.5% After Surprise Leadership Switch


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China-traded shares in the U.S. closed sharply lower today amid worries about growth in the world’s No. 2 economy, fierce competition in its e-commerce world, and continued geopolitical tension between the U.S. and China after this week’s high-level meeting between the two sides in Beijing left many sources of conflict unresolved.

Billions of dollars of market capitalization in China stocks were wiped out today. Among today’s losers, WuXi Biologics dropped nearly 18%, social media Bilibili lost 8.6%, e-commerce sites PDD and declined by nearly 7% each, Alibaba fell 4.5% and EV maker Li Auto slid 1.5%.

China shares underperformed broader U.S. indices that were weighed down by interest rate concerns ahead of testimony by Federal Reserve Chairman Jerome Powell this week. Lower rates could help global economic growth. The Nasdaq declined by 0.16% and Dow lost 0.72%.

China investors since the end of last year have hoped for a big rebound in consumer spending following the end of Covid-linked lockdowns stifled the economy. However, weak private and foreign investment, high youth unemployment and continuing tension in relations with Western nations have fueled caution; meanwhile, a government stimulus package expected by some has yet to materialize. A new anti-espionage law to take effect on July 1 has American companies worried about continued security raids on foreign businesses after recent raids on Bain and Mintz, though more positive notes have been sounded during visits to the country in the past month by Elon Musk, Bill Gates and Jamie Dimon, all of whom have business in China.

Investors hoping for positive news about U.S-China relations after this week’s meeting between U.S. Secretary of State Antony Blinken and Chinese President Xi Jinping in Beijing didn’t get it today, however. The Wall Street Journal ran a front-page story with the headline: “China Seeks Site in Cuba for Joint Training,” a move it said is “sparking alarm” in Washington and raises the possibility of People’s Liberation Army forces setting up 100 miles from Florida’s coast. That came alongside other post-Xi-Blinken-meeting reports focused on a continuing lack to military-to-military communication at a time when China’s territorial claims have spurred security tension in East Asia, particularly regarding Taiwan.

Alibaba was a focus today after the surprise announcement yesterday that Daniel Zhang would step down as CEO in September to focus on the company’s cloud business. A co-founder when Alibaba was set up in 1999, billionaire vice chairman Joe Tsai will become chairman as part of the leadership overhaul. Tsai is better known these days as the main owner of the NBA’s Brooklyn Nets. Eddie Yongming Wu, another co-founder, will become CEO.

Alibaba’s problems run beyond slower-than-hoped Chinese growth. The company has struggled with low-cost e-commerce competition from the likes of PDD at home and abroad. Privately held, apparel-focused Shein has also exploded in popularity overseas in recent years, as has ByteDance, the owner of widely popular social media TikTok.

The limited presence of Alibaba’s main founder, charismatic billionaire Jack Ma, in the past few years hasn’t helped. Ma fell out with Communist Party authorities after criticizing officials in 2020; breathy media reports of his overseas travels to Japan and elsewhere have only served to contrast his warm global welcome with his low profile at home, though that has reversed somewhat this year.

Besides its core e-commerce business, Alibaba spinoffs and investments ranging from EV maker XPeng to film maker Alibaba Pictures and Alibaba Health Information have faced challenges of late. Alibaba-invested brokerage E-House has defaulted on debt, linking the Internet giant to China’s real estate industry morass. A wider government crackdown on large tech companies has more broadly hurt the industry’s biggest successes.

To bolster growth, Alibaba in March announced moves to split itself into six parts. Strikingly, Zhang’s exit plan as CEO was announced only months later.

Zhang is hardly the only chairman or CEO of late to leave a leadership job at one of China’s web heavyweights. PDD main founder, billionaire Colin Huang, relinquished the chairmanship and success at the company has followed. This week’s plan at Alibaba to elevate Tsai and Wu may not comfort Alibaba investors, however, until the company shows that it can execute a rebound plan in the current tough environment.

See related posts:

“Diplomatic Drive-By?” Blinken Gets Short Meeting With Xi As U.S.-China Contacts, Conflicts Continue

Arab-China Investment, Manufacturing Poised To Grow After High-Profile Event In Riyadh

Gates Foundation To Donate $50 Million To Flight Infectious Disease, Partner With Beijing, Tsinghua

China’s “Fits And Starts” Economy Needs Private Sector Boost — Matthews Asia’s Andy Rothman

Forbes China Global 2000: China’s Ranks Thin As Real Estate Woes Persist

Elon Musk Visit To Beijing Highlights Business Role In U.S.-China Ties


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Lisa Holden
Lisa Holden
Lisa Holden is a news writer for LinkDaddy News. She writes health, sport, tech, and more. Some of her favorite topics include the latest trends in fitness and wellness, the best ways to use technology to improve your life, and the latest developments in medical research.

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