President Donald Trump's two-day summit with Chinese President Xi Jinping in Beijing has produced only modest results, highlighting the ongoing challenges in US-China relations. As reported by Central News, the summit has failed to deliver significant breakthroughs in resolving key issues between the world's two largest economies. The limited progress underscores the complex nature of bilateral relations and the continued tensions that persist despite high-level diplomatic engagement.
China's economic recovery from its three-year deflationary period is gaining momentum, with first-quarter GDP growing 5.0% year-on-year, up from a three-year low of 4.5% in the fourth quarter. According to reports from Reuters, this growth is primarily driven by strong manufacturing and export performance, though consumer spending remains patchy and property continues to decline. Beijing's decade-long focus on advanced technology, green energy, and high-end manufacturing investments is clearly paying off, with these policy priorities showing up in stock market performance. The economic momentum comes as Chinese leadership delivers firm messages about shifting global power dynamics, emphasizing that China will not be easily pressured amid rising tensions over Taiwan and broader geopolitical competition with the United States.
Within China's stock market, performance varies significantly across sectors aligned with Beijing's policy priorities. As reported by Reuters, three of the eight Hong Kong-listed sectors outperforming the market through mid-May - industrials, technology, and process industries - all sit at the intersection of Beijing's policy priorities. However, within these sectors, performance diverges sharply. China's two largest electric-vehicle makers BYD and Geely showed strong performance with gains of 2% and 19% respectively in the year through mid-May, buoyed by premium products and strong exports. In contrast, smaller rivals Xiaomi and XPeng fell more than 20% due to margin fears from intensifying price wars in the industry.
Despite AI being a key Beijing priority, caution remains warranted as "AI losers" are emerging in China. Following the launch of Anthropic's Claude AI platform in early 2026, shares of Chinese platforms serving tourism and online music - including Trip.com and Tencent Music - nosedived and have not recovered. According to Reuters, technology services sector - home to AI giants Tencent, MiniMax, and Baidu - dropped 17% in the year through May 15, reflecting investor anxiety over high development costs, intense competition, and doubts over near-term profitability.
Companies successfully expanding high-value exports are better positioned to avoid domestic margin pressures. As reported by Reuters, Geely and BYD both appear to be in this category, with BYD posting a 56% year-on-year rise in exports in the first quarter of 2026 and Geely boasting a 126% jump. These companies are navigating geopolitical challenges by establishing production facilities abroad, with BYD's plants in Hungary, Brazil, Turkey, and Thailand, and Geely's factories in Europe and intended acquisitions in Mexico. Battery leader CATL is following the same strategy with its gigafactory in Hungary.
Beijing's efficiency and innovation efforts are showing measurable results across multiple sectors. According to Reuters, in the solar energy industry, government-encouraged consolidation has pushed more than 40 smaller firms into bankruptcy or acquisition, rationalizing a bloated sector. Sector leader Jinko Solar has benefited significantly, up more than 20% over the past 12 months. In biotech, the National Medical Products Administration's implementation of faster approval timelines and alignment with international bodies has accelerated clinical trials and driven Chinese biotech ETFs higher this year.
