In Depth: Chinese Exporters Pivot to Domestic Consumers in Trade War Hedge

Chinese student visas: More than 700 American scholars of China studies have signed a petition that urged the U.S. secretary of state to pause recent visa restrictions on Chinese students. The petition pointed out that restricting Chinese student visas will only make it easier for China to transform itself into a leading technological power because it will push many American-trained Chinese researchers to return home. Although Chinese people make up the largest share of international undergraduates in the U.S., their numbers have been dwindling since the 2020-2021 school year. The number of Chinese students in higher education in the U.S. fell to a 10-year low in the 2023-2024 school year.

Born-into-luxury IPO: China’s largest high-end postpartum care provider Saint Bella passed its Hong Kong IPO hearing on Monday. Saint Bella operates 96 centers offering luxury maternity and baby care under multiple brands across 30 Chinese cities as well as in Hong Kong, Singapore and Los Angeles. It has expanded rapidly through a low-capital strategy, achieving 799 million yuan ($112 million) in revenue in 2024, a 42.6% year-on-year increase driven primarily by growth in center numbers. Despite its premium pricing — with flagship brand packages averaging nearly 240,000 yuan per client — Saint Bella continues to face financial losses, reporting a widened net loss of 547 million yuan in 2024 due to rising labor, rental and marketing costs. Prior to its IPO, the company completed seven funding rounds, attracting notable investors including Tencent, Gaorong Capital, Sun Hung Kai Properties and Swire Properties.

Audio book deal: Tencent Music Entertainment announced a $1.26 billion cash-and-stock deal to acquire China’s largest online audio platform Himalaya, pending regulatory approval, as it seeks to expand its long-form audio offerings amid slowing user growth in its core music business. After approval, Himalaya will become a wholly owned subsidiary of Tencent Music. The news boosted Tencent Music’s stock by more than 10% during pre-market trading in the United States. Himalaya, which previously made a number of unsuccessful IPO attempts in America and Hong Kong, confirmed it would retain its existing brand, operations, management team and strategy post-acquisition. Launched in 2013, Himalaya holds a 25% market share in China’s online audio industry but has faced slowing growth amid intense competition from free-content rivals, notably ByteDance’s Fanqie Changting.

Consumption pivot: China has proposed a series of policies aiming to create fairer, more inclusive and accessible public services as a way to improve people’s livelihoods so they can spend more as consumers. The goal, as laid out in a document released Monday, can help reduce the economy’s dependence on infrastructure and real estate for growth, and instead focus on investing in people. As economic headwinds have grown in recent years, China’s inadequate social security for certain groups, sluggish job market and declining income expectations have become key factors restricting consumer spending. Chinese policymakers see boosting consumption as a way to offset the economic fallout from the trade war and other challenges restricting external demand.

AI chips: Huawei Technologies Co. Ltd. founder Ren Zhengfei downplayed the impact of U.S. export restrictions on China’s artificial intelligence (AI) ambitions, arguing that China remains well-equipped to compete thanks to its strong energy infrastructure, world-leading telecommunications networks and rapid adoption of AI across its manufacturing sector. The head of the telecom equipment giant said that the real key to AI’s advancement lies not solely in algorithms or chips, but in industry-specific knowledge. Regarding semiconductors, Ren said through methods like stacking and clustering, the computational results are comparable to the most advanced levels. His remarks come nearly a month after the U.S. Commerce Department tightened enforcement of restrictions on the use of Huawei’s most advanced AI chips.