Chinese and Hong Kong stocks rose on Tuesday, led by gains in artificial intelligence companies, as investors responded to signs of renewed US China cooperation on AI safety and looked ahead to Chinese President Xi Jinping’s meeting with US President Donald Trump later this week.
At midday, China’s benchmark Shanghai Composite was up 0.2%, while the blue chip CSI300 gained 0.5%.
The Shenzhen index rose 0.5%, the ChiNext Composite gained 0.9% and Shanghai’s technology focused STAR50 index climbed 1.3%.
AI stocks were among the strongest performers, with the relevant sector index rising 2.3%.
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The gains came after US and Chinese officials agreed to continue discussions on artificial intelligence risks and mechanisms for responding to potential AI safety incidents.
AI cooperation adds to market optimism
US Treasury Secretary Scott Bessent said on Monday that senior American and Chinese officials would meet again in around two months in Shenzhen to discuss AI risks and communications protocols for potential safety incidents.
The planned talks offer another channel for engagement between Washington and Beijing at a time when trade and technology remain major sources of tension.
Bessent also made positive comments about the broader US China economic relationship ahead of Xi’s state visit to the United States.
Xi is scheduled to visit Washington from September 23 to 25 at Trump’s invitation, with the two leaders expected to discuss trade and wider economic relations.
Investors are nevertheless approaching the meeting cautiously.
“Our expectations for this state visit are limited, with our focus more on the optics and symbolism of the trip rather than actual outcomes,” said William Bratton, head of Asia Pacific cash equity research at BNP Paribas.
He said any extension of the existing Busan trade truce could be accompanied by measures designed to establish frameworks for managing the current relationship rather than producing a major breakthrough.
Hong Kong technology stocks advance
Hong Kong markets also moved higher.
The Hang Seng Index gained 0.4%, while the Hang Seng Tech Index rose 1%.
Alibaba shares reached a one month high during the session after Chief Executive Eddie Wu said the company aims to expand its global cloud data centre capacity to more than 20 gigawatts by 2032.
The announcement highlights the scale of China’s ambitions in cloud computing and AI infrastructure.
Data centres are becoming increasingly important to the AI industry as companies require greater computing capacity to train and operate increasingly sophisticated models.
Alibaba’s expansion plans therefore come as Chinese technology companies seek to strengthen their domestic and international cloud infrastructure while competition with US technology firms intensifies.
Markets watch the Xi Trump meeting
The stock market gains reflect cautious optimism rather than expectations of an immediate transformation in US China relations.
The two countries remain divided over tariffs, technology restrictions, critical minerals and access to advanced computing technology.
The planned AI safety discussions nevertheless provide a potential area for continued communication.
The significance of the Xi Trump meeting will therefore extend beyond any individual trade announcement. Markets will be watching for indications of whether Washington and Beijing can maintain the current truce and establish mechanisms for managing disputes in areas where competition is likely to continue.
For Chinese and Hong Kong technology companies, developments in AI policy could be particularly important. Greater cooperation could reduce some uncertainty around the sector, while continued restrictions on advanced technology and semiconductor access could constrain expansion.
For now, investors appear to be balancing those longer term risks against signs that the world’s two largest economies are keeping channels of communication open.
The AI rally has provided an immediate boost to Chinese and Hong Kong markets, but whether that optimism lasts may depend on what Xi and Trump say and agree when they meet later this week.
With information from Reuters.
