NextFin News - A high-stakes summit between U.S. President Trump and Chinese President Xi Jinping has ignited a tactical rally in Chinese technology shares, following reports that the White House has cleared the path for Nvidia to resume sales of its advanced H200 artificial intelligence chips to Chinese firms. The move, which includes a 25% surcharge payable to the U.S. Treasury, represents a significant pivot in the administration’s approach to semiconductor export controls, shifting from blanket bans toward a "tax-and-track" model that prioritizes American revenue and oversight over total isolation.
The market reaction was immediate and concentrated. In Hong Kong trading on Thursday, Alibaba Group Holding Ltd. shares rose 5.05% to HK$139.50, while Tencent Holdings Ltd. climbed to HK$462.60. These gains reflect a growing belief among institutional investors that the "bottleneck of compute" which has hampered Chinese AI development for nearly two years may finally be loosening. The presence of Nvidia CEO Jensen Huang in Beijing alongside the U.S. delegation further solidified expectations that the licensing process, which had been stalled by State Department national security reviews since late 2025, is nearing a functional resolution.
Dong Chen, chief Asia strategist at Pictet Wealth Management, characterized the summit as a near-term catalyst for a sector that has long traded at a steep discount to its global peers. Chen, who has maintained a cautiously constructive view on Chinese equities throughout the recent volatility, noted that the mere fact of the meeting sends a positive signal to a market that had priced in a much more adversarial trajectory. However, Chen’s view is not yet a consensus on Wall Street; many analysts remain wary that the 25% surcharge and strict end-use reporting requirements may still limit the actual scale of chip deployments.
The reported deal involves China agreeing to significant purchases of U.S. agricultural products, energy, and aircraft in exchange for the easing of certain tech restrictions. Goldman Sachs analysts described this as a "tactical catalyst" rather than a "grand bargain," suggesting that while the yuan and tech stocks may see a relief rally, the structural tensions regarding intellectual property and regional security remain unresolved. The bank’s analysis suggests that the U.S. President Trump administration is leveraging tech access as a primary bargaining chip to reduce the trade deficit, a strategy that prioritizes economic concessions over the long-term containment goals favored by previous administrations.
Skepticism remains high among national security hawks in Washington and some sell-side researchers. Critics argue that allowing H200 sales—even with a 25% levy—risks accelerating China’s domestic AI capabilities at a critical juncture. From a market perspective, the sustainability of this rally depends heavily on corporate earnings. While the "Nvidia factor" provides a sentiment boost, the underlying fundamentals of Chinese internet giants continue to face headwinds from sluggish domestic consumption and a regulatory environment that, while stabilized, remains far more restrictive than the pre-2020 era.
The H200 chips in question are Nvidia’s second-most powerful AI processors, and their availability is vital for Chinese cloud providers like Baidu and Alibaba to compete in the global large language model race. Under the new reported guidelines, every sale will require a specific license and rigorous reporting on where the chips are housed and what tasks they are performing. This level of transparency is a steep price for Beijing to pay, and it remains to be seen how many Chinese state-linked firms will be willing to accept such intrusive U.S. oversight in exchange for silicon.
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