The Bloomberg “China Show” highlighted cautious optimism in Asian markets amid mixed economic signals and geopolitical tensions, with China’s Q2 GDP growth slightly exceeding expectations despite challenges in domestic demand and the property sector. A key development was Nvidia’s announcement of resuming H20 AI chip sales to China following US export license assurances, sparking a tech rally and signaling a potential easing in US-China tech tensions, while broader discussions emphasized the need for structural reforms and boosting domestic consumption in China.
The Bloomberg “China Show” opened with a broad overview of the Asian equities market, highlighting a flat start ahead of key Chinese economic data releases. Investors were cautiously optimistic as stocks reached their highest levels this year, despite mixed signals from government bonds, particularly Japan’s 10-year yield hitting its highest since 2008. The show also touched on geopolitical tensions, including President Trump’s tariff threats against Russia over the Ukraine conflict, and the delicate balance in US-China relations.
Attention then shifted to China’s economic performance, with second-quarter GDP growth slightly surpassing expectations at 5.2%. While industrial production and retail sales showed resilience, fixed asset investment lagged, reflecting ongoing domestic demand challenges. Analysts discussed the sluggish property market, noting 25 consecutive months of declining home prices and skepticism about a large-scale housing stimulus akin to 2015. The upcoming Politburo meeting was anticipated to provide clearer policy direction, though major stimulus measures were not expected imminently.
A significant highlight was the breaking news from Nvidia, which announced it expects to resume sales of its H20 AI chips to China after receiving assurances from the US government regarding export licenses. This development sparked a sharp rally in tech stocks and Nasdaq futures, as Nvidia’s CEO Jensen Huang prepared to visit Beijing. The easing of export controls was seen as a major positive for Nvidia and the broader Chinese AI ecosystem, although experts cautioned that US-China tech tensions and export restrictions might persist in other forms.
The program also covered broader market dynamics, including Japan’s rising government bond yields and their potential impact on borrowing costs and economic growth. Discussions with market experts emphasized the importance of boosting domestic consumption and investment in China to sustain growth, especially through job creation and improving consumer confidence. The “anti-evolution” campaign aimed at reducing overcapacity in certain sectors was noted as a market-oriented approach to structural reform, distinct from past heavy-handed interventions.
Finally, the show explored sector-specific trends, particularly the strong performance of China’s biotech industry, which has become a leading growth driver amid innovation and government reforms. Despite geopolitical uncertainties and tariff concerns, the biotech sector’s integration with global markets and R&D capabilities was highlighted as a positive sign. Overall, the episode painted a complex picture of cautious optimism in China’s markets, tempered by structural challenges and ongoing geopolitical risks, with Nvidia’s chip sales resumption standing out as a key market catalyst.
