US-traded shares of major Chinese tech firms soared after the State Council, China’s cabinet, pledges to adopt policies favorable to economic stability in a meeting held by Vice Premier Liu He on Wednesday.  

The Nasdaq Golden Dragon China Index, which tracks stocks of Chinese companies, jumped 33% on Wednesday to 7,230 points. 

Zhihu, known as China’s Quora, led the jump with a 79% increase on Wednesday trading, followed by Kingsoft Cloud’s 72%, online grocer Dingdong Maicai’s 66%, and a 64% jump by housing broker Ke Holdings. Around 160 Chinese companies recorded a 10% share jump or higher, according to a rough count by local media iFeng. Tech majors like Alibaba, JD, Baidu, and Pinduoduo, climbed by around 40%.

Why it matters: The Wednesday meeting is the first major policy adjustment after China’s year-long crackdown on prominent areas across the board, from the capital market to internet companies to real estate. Tech companies, especially those under the platform economy model, were among the worst-hit during the regulatory clampdown. However, the country kept increasing investment in hard and core technologies like semiconductors and smart manufacturing.

  • With favorable policies, the State Council sends a reassuring signal to investors after Chinese tech stocks saw intense sell-offs over the past weeks.

Details: China’s Vice Premier Liu He said the Chinese government will “actively introduce market-friendly policies and prudently introduce policies that have a contractionary effect,” according to a briefing of the Wednesday meeting.

  • The Chinese government said that it will continue to support companies to seek listings in the overseas markets. The remarks come less than a week after the US Securities and Exchange Commission named five Chinese companies for potential delisting. The meeting added that China and US regulatory bodies have “maintained good communication and made positive progress” in the regulation of US-listed Chinese firms and said a concrete cooperation plan is underway.
  • The meeting also clarified China’s regulatory moves on big internet platforms. It said to complete rectification work on these platforms but asked for “steady,” “predictable,” and “transparent” regulations, a notable different tone from last year’s sudden and intense regulatory moves.  

Context: Chinese leadership is under pressure to keep economic growth steady when the country faces challenges from all sides, from slowing consumption to Covid resurgence to international pressure from the Russia-Ukraine war. 

  • Premier Li Keqiang, speaking at China’s “two sessions” meeting in early March, said that the Chinese economy should expand by “around 5.5%” this year. It’s the lowest target for the country in 30 years, but still higher than the World Bank’s expectation of 5.1% and the International Monetary Fund’s prediction of 4.8% for 2022.
  • China’s 2021 economic growth took a hit in the latter half of the year after regulators launched a series of crackdowns that eliminated industries like private education and crypto mining and slowed growth and enthusiasm in games, overseas IPOs, and other tech-related areas. Averaging out at 8.1%, the country’s 2021 GDP growth fell sharply from 18% in the first quarter to 4% in the fourth quarter. 

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.